This paper aims to investigate the nonlinear stability and dynamic characteristics of grid-connected hydropower station (GCHS) with surge tank of a long lateral pipe (STLLP). Firstly, a novel nonlinear mathematical model of GCHS with STLLP considering high-order head loss of the hydraulic system, and the flow inertia and head loss of long lateral pipe in surge tank is established and verified. Then, the stability and dynamic characteristics are studied by using Hopf bifurcation theory, which is also verified by numerical simulation. Moreover, the effect mechanism and influence factors of long lateral pipe on the stability and dynamic characteristics of GCHS with STLLP are explored. Finally, the coupling effect mechanism between hydropower station and power grid, and influence factors of power grid are analyzed. The results indicate that the emerged bifurcation of GCHS with STLLP is supercritical and the stable domain is on the lower left to the bifurcation line. Obtained by the proposed nonlinear mathematical model of GCHS with STLLP, it is much smaller than the reference in which the flow inertia and head loss of a long lateral pipe are neglected. Having smaller length, larger area, and rougher material, a long lateral pipe is beneficial to the stability and dynamic characteristics of GCHS with STLLP. The power grid affects the stability and dynamic characteristics of GCHS with STLLP through coupling effect, and the large-scale power gird is favorable to GCHS with STLLP.