The invention relates to a distributed sewage treatment and regeneration technology suitable for small towns, belonging to the technical field of water pollution treatment. The technology comprises the following steps: hydrolysis and acidification are carried out on urban sewages firstly; then the processed urban sewages is pumped into an aeration biological fluidized bed through a submersible sewage pump; organic matters in the processed sewages are removed and denitrification is carried out on the sewage subject to organic matter removal by an anoxic zone of the aeration biological fluidized bed; afterwards, the treated sewages enter a sedimentation basin for separating mud from water; suspended matters in the effluent of the sedimentation basin is removed through a rapid sand filter and then the effluent enters a buffer pool; and finally the effluent is further purified in the buffer pool by artificial soil percolation and enters a clean water pond through a collecting pipe. The sewage treatment method features simple technique and stable effluent quality and water quality is in line with reuse of urban recycling water for urban water quality standard for urban miscellaneous water (GB/T 18920-2002).