The invention provides a slurry bed reactor and a reaction method. The slurry bed reactor comprises a reactor shell used for accommodating a slurry bed layer, a multistage fractal gas distributor usedfor distributing reactant gas into multiscale bubbles, and a heat exchange tube which is used for conducting heat exchange with reactants and maintaining preset temperature in a reaction process, wherein the multistage fractal gas distributor is immersed in the slurry bed layer, and the heat exchange tube is immersed in the slurry bed layer. According to the slurry bed reactor and the reaction method, by introducing the multistage fractal gas distributor to generate the multiscale bubbles for three-phase reaction, the problems of a small gas-liquid contact area, a large flow dead zone, catalyst deposition and the like caused by bubbles in single size are solved. Moreover, by introducing the heat exchange tube of a fractal structure, the phenomenon of bubble backmixing is avoided, so thatthe novel three-phase slurry bed reactor with controllable flows and high reaction efficiency is obtained.