This paper is devoted to analyzing multigrid algorithm for solving elliptic interface problems discretized using the partially penalized immersed finite element (PPIFE). By taking the average values of nodal variables and integral variables, we construct intergrid transfer operators for the P1P1 partially penalized immersed finite element (P1P1-PPIFE) and the Crouzeix–Raviart partially penalized immersed finite element (CR-PPIFE), which satisfy certain stable approximation properties. An extra interface correction procedure is added in the smoothing steps to ensure the robustness of multigrid algorithm. We prove that the convergence of W-cycle multigrid algorithm and the condition number of the variable V-cycle as preconditioner are optimal by verifying the regularity-approximation assumption, which means that the convergence rate of algorithm is independent of mesh level, mesh size, and the position of the interface relative to the mesh. Numerical experiments illustrate the convergence of our algorithms using the W-cycle, V-cycle, and preconditioned conjugate gradient algorithm (PCG) with the V-cycle.