The AC-DC hybrid microgrid is a credible evolution path for the microgrid. State estimation in complex distribution network is a significant foundation for the safe operation. In AC-DC hybrid microgrid, centralised state estimation algorithms have quite a few deficiencies such as large communication capacity and privacy protection. In response to these obstacles, this paper proposed a novel distributed state estimation algorithm. First, a three-stage state estimation model was established for AC-DC hybrid microgrid, in which the second stage is a nonlinear transform for the linearisation of the nonlinear state estimation progress so that the first and third stage can solve the linear state estimation problem. Furthermore, the Lagrangian relaxation method was ultilised for the distributed problem solution. In the proposed algorithm, AC subsystems and DC subsystems respectively execute state estimation through local information, and the overall consistency of the system state estimation can be eventually achieved according to the transfer iteration of the boundary information. The computational efficiency and convergence of the proposed method was ensured owing to the combination of bilinear theory and Lagrangian relaxation. Simulation results indicate that the proposed method can achieve its goal and be superior to existing method in efficiency.