The present invention discloses a Fiber Bragg Grating demodulation device with a suppressed fluctuation at a variable ambient temperature and a demodulation method. The device comprises a broadband light source (1), an optical attenuator (2), a tunable F-P filter (3), a first optical fiber isolator (41), an erbium-doped optical fiber amplifier (5), an optical fiber first-stage beam splitter (6), a first optical fiber second-stage beam splitter (71), optical fiber circulators (8), FBG sensor arrays (9), a first photoelectric detector array (161), an optical fiber gas cell (10), a second optical fiber second-stage beam splitter (72), an optical fiber F-P etalon (11), a notch filter (12), an optical fiber assisted interferometer (13), a data acquisition card (17) and a processor (18).