This application provides an encoding method and an encoding apparatus based on a polar code, to improve compression performance of a source sequence of a limited length. The method includes: obtaining a source bit sequence; encoding the source bit sequence by using a polar code generation matrix that is based on sub-block column transformation, to obtain a first bit sequence, where the polar code generation matrix that is based on the sub-block column transformation is determined based on a first polar code generation matrix and a transformation matrix, and the transformation matrix may achieve effect of performing sub-block column transformation on the first polar code generation matrix; and compressing the first bit sequence, to obtain a compressed bit sequence.