The invention relates to a method of producing a liquid fuel with whole fraction tar hydrogenation. Particularly, the whole fraction tar hydrogenation method comprises the following steps of slurrying, suspended bed hydrogenation, separation of a suspended bed hydrogenation product, fixed bed hydrogenation, separation of a fixed bed hydrogenation product, tail gas treatment and the like. The wholefraction tar hydrogenation method provided by the invention has the advantages that whole fraction tar is directly treated without fractionation treatment, impurity removal and purification, and theraw material utilization rate and the yield of product oil are high; a suspended bed is mild in operation condition, simple in technology and low in equipment investment; and the catalyst utilizationrate is high, the cost is low, and the quality of a product is good.