This invention discloses a device and its application method for processing liquid fuel by catalyzing and pyrolyzing sewage and sludge, in which, the device is composed of an N2 gas tank source, a heating oven, a temperature control instrument, a condenser, a liquid phase collection bottle, a buffer bottle, an absorption bottle, a gas bag and a raw material pyrolyzing reactor, the method includes putting a pyrolyzing reactor with oil sludge and catalysts in a heating oven, giving cooling water, turning on the supply and designing temperature controlling program to heat it to 500-600 deg.C with the temperature rising speed of 5-10deg.C/min and keeping 30-40min. the content of petrol reaches to 20%, diesel oil to 50%, the rest is heavy oil, the content of C64 component in the fuel gas reaches to 40%, mild hydrocarbon gas, liquid fuel oil and solid coke can be got from the pyrolyzed sludge.