The invention provides a 125 ksi high-strength and high-toughness petroleum casing pipe for exploring thickened oil through the SAGD method and a manufacturing method thereof. The casing pipe comprises, by weight, 0.23-0.28% of C, 0.17-0.30% of Si, 0.56-0.75% of Mn, smaller than or equal to 0.015% of P, smaller than or equal to 0.007% of S, smaller than or equal to 0.20% of Ni, 1.0-1.20% of Cr, 0.35-0.55% of Mo, smaller than or equal to 0.15% of Cu, smaller than or equal to 0.01-0.04% of Al and the balance Fe. The manufacturing method includes the steps of selecting raw steel-making materials; adjusting steel compositions through external refining, vacuum degassing and argon stirring; lowering the out-of-roundness of the outer diameter and the unevenness of the wall thickness of a steel pipe by carrying out high-precision rolling through a PQF unit; and carrying out heat treatment to obtain high-strength and high-toughness matching and lowering the residual stress of the steel pipe by increasing the thermal straightening temperature and through the stress relief annealing technology. The casing pipe and the manufacturing method thereof have the beneficial effects that the heat stability is good, the yield strength is not lower than 800 MPa at 350 DEG C, the external extrusion deformation resistance is high, the actual anti-collapse property is higher than the API calculation value by more than 56%, and the requirements of exploring the thickened oil through the SAGD method are met.