The invention relates to the field of engine equipment and discloses an oval piston birotor internal combustion engine and a working method thereof. For the oval piston birotor internal combustion engine, through running fit of an oval piston and a closed cylinder body inner cavity, two variable type combustion chambers exist in a cylinder and mutually wax and wane along with rotation of the oval piston, and the internal combustion process of air inlet, compression, work applying and air discharge is alternatively carried out in the two combustion chambers, that is, when an output shaft rotor rotates two loops, work is applied twice; compared with the situation that work is applied once when an output shaft rotor of a common four-stroke engine rotates two loops, high horsepower is realized; and in addition, compared with the situation that a single cylinder applies work once when an output shaft rotor of a triangular birotor engine rotates one loop, and as the combustion time and work-applying time are prolonged, gas combustion is more sufficient, emission of pollution gas is reduced, and the environmental protection problems of high oil consumption and heavy pollution are solved.