The invention relates to a reducing and reusing device for multi-oxygen combustion smoke of an industrial kiln and an operation method thereof. The device comprises the kiln, a multi-oxygen combustor arranged on the kiln, an oxygen valve station for supplying oxygen to the multi-oxygen combustor, a carbon dioxide reduction furnace, a waste heat boiler, a desulfurizing, dedusting and dehumidifying device, a compressor, a first gas storing tank and a second gas storing tank, wherein a smoke exhausting pipe of the kiln is connected to a gas feeding pipe of the carbon dioxide reduction furnace; a reduced gas exhausting pipe of the carbon dioxide reduction furnace is sequentially connected to the waste heat boiler, the desulfurizing, dedusting and dehumidifying device, the compressor and the first gas storing tank; the first gas storing tank is correspondingly connected to the multi-oxygen combustor and the second gas storing tank; carbon monoxide gas in the second gas storing tank can be used as fuel to be supplied to other kilns for combustion, or supplied to a fuel generator set to generate power and then connected to a grid, or used as a chemical material. The device has the advantages of being simple in structure, and reasonable in design, recycling industrial waste gas, saving energy and reducing emission; the fuel cost can be decreased, and moreover, the emission of nitric oxide and carbon dioxide gas can be reduced; the device has a wide application prospect.