A method and device for reducing fuel consumption of a diesel engine by catalytic decomposition of oxygen-containing fuel belong to the technical field of diesel engine combustion energy saving and emission reduction. In the present invention, the oxygen-containing fuel is fed into the catalytic reactor installed in the exhaust channel of the diesel engine, and the catalytic reactor is heated by the waste heat of the tail gas discharged from the combustion chamber, so that the oxygen-containing fuel is catalytically decomposed, and the generated hydrogen-rich and carbon monoxide-rich The decomposed gas enters the intake port, mixes with air, and enters the combustion chamber. At the same time, the emulsified oil is sprayed from the nozzle. The atomized emulsified oil evaporates, mixes, ignites and burns in the combustion chamber, and pushes the piston to do work. The system of the present invention makes full use of the waste heat of the exhaust gas of the diesel engine, and can realize the catalytic decomposition of the oxygen-containing fuel without providing energy from the outside. At the same time, combined with the use of emulsified oil, the comprehensive fuel saving rate of the diesel engine can reach 10-15%, and can be greatly improved. Reduce the emission of pollutants such as nitrogen compounds and soot, so as to achieve the purpose of energy saving and emission reduction.