The invention discloses an identity authentication method with privacy protection and password recovery. When a user registers on line and/or logins, the original data input by the user are processedby data fusion and are hidden; next, the data obtained by data fusion is encrypted using one-way hash function, only the transformed results are then transmitted to a server end, the server program stores the transformed results when the user registers, and when the user logins or recovers the password, the identity authentication is accomplished by comparing the transformed results with the stored results during registration. By using the data fusion and the one-way hash function, the method encrypts the original 'question' and 'answer' data input by the user, which greatly enhances the privacy of the user's data, avoids a network manager from being attacked, greatly increases network security, avoids loss to the user caused by the user's data being stolen, and is applied for various network users to register on line and/or login.