The invention relates to a method and device for sensing and demodulating Bragg fiber grating. The method in the invention uses the principle that chatter fiber grating has different reflective wavelengths at different positions to convert the change of sensed fiber grating wavelength into the change of system optical path difference, and then the optical path difference is measured by low coherent demodulating method, thereby being capable of accurately obtaining wavelength change of sensed fiber grating so as to obtain sensing amount. The device realizing the method comprises a broadband light source at the optical communication band of center wavelength, a fiber optic isolator, a four-port 3-dB optical fiber coupler, a polarization controller, a tunable fiber delay line, a three-port 3-dB optical fiber coupler, a sensing fiber grating, a linear chatter fiber grating, a photodetector and an oscillograph. The invention has higher measurement precision of wavelength resolution, has the advantages of strong anti-interference, simple structure, low cost, and the like, and can obtain different resolutions and parameter ranges, thereby being much applied to practical application.