The invention discloses a catalytic conversion method of petroleum hydrocarbon. High-sulfur wax oil is contacted with a heat regeneration catalyst at the lower portion of a catalytic cracking unit reactor and subjected to a cracking reaction, wherein the heat regeneration catalyst has relatively low activity and relatively uniform activity distribution, has a coarse particle size distribution and contains macropore zeolite and mesopore zeolite, the generated oil gas and a carbon-containing catalyst go up and are subjected to a selective hydrogen transfer reaction and an isomerization reaction under a certain reaction environment, the reaction oil gas is separated to obtain a reaction product containing liquefied gas, gasoline and catalytic wax oil, and the spent catalyst is recycled for use after stripping and regeneration, wherein the catalytic wax oil and optional other secondary processing wax oil are introduced into the hydrocracking unit for reaction, and preferably the hydrocracked tail oil is returned to the catalytic cracking unit. According to the method, the diesel oil yield and the cetane number of the diesel oil are increased, the mass percentages of low carbon olefins such as propylene and butylenes in the liquefied gas are increased, the hydrogen utilization rate of the raw materials is increased, and simultaneously the utilization rate of hydrogen in the raw materials is raised, so that the petroleum resource can be saved, and the method provides a novel approach for cleaning the refining process and the refined oil products.