The invention relates to a fluidized bed reactor and a hydrogenation method thereof. The fluidized bed reactor (7) comprises a reactor shell (103) vertical to the ground and a phase separator (111) at the upper part of the shell (103). An inner circulation zone is provided under the phase separator (111), and comprises a cylinder (114), a tapered diffusion section (115) and a guiding structure (104). In the hydrogenation method using the fluidized bed reactor (7), an expanded bed reactor (3) is used to further hydrogenate part of the product from the fluidized bed reactor (7), and supply catalyst without influencing on the stable operation of the fluidized bed reactor (7).