An all-fiber color laser and a light-illuminating method thereof are disclosed. The steps of the light-illuminating method include: providing a fiber color laser having a pump light source and an optical fiber with a multi-level wavelength gain medium, a first grating assembly and a second grating assembly; radiating a laser via the pump light source; generating a plurality of laser beams with various wavelengths via the multi-level wavelength gain medium; adjusting the deformation of the second grating assembly to control output of the laser beams with various wavelengths; and executing periodical modulation to generate a periodical lengthwise deformation of the second grating assembly for mixing color.