The invention discloses a high-speed large-dynamic-range fiber bragg grating demodulation system, which comprises a broadband light source, a three-port optical fiber circulator, an optical fiber coupler with a splitting ratio of 50:50, a first narrow-band filter, a second narrow-band filter, a first photoelectric detector, a second photoelectric detector and a data acquisition and processing unit, wherein the output spectrum of the broadband light source is in a Gaussian type with a linear long hypotenuse, the spectrum has unimodality, high-speed demodulation of the fiber bragg grating is carried out by utilizing left and right approximately linear long hypotenuses in the output spectrum of the broadband light source, and the wavelength change of the grating is converted into the change of the power of reflected light output by the grating. The invention further provides a method for demodulating a fiber bragg grating sensor by using the high-speed large-dynamic-range fiber bragg grating demodulation system. The demodulation system has the advantages of high demodulation speed, wide measurement range, high demodulation precision, small limitation on grating wavelength and the like, and is suitable for testing transient large variables such as explosive shock wave pressure.