The invention discloses a cyclic utilization sedimentation tank suitable for drilling water and a cyclic utilization method. The cyclic utilization sedimentation tank comprises a sedimentation tank body with an upward opening and further comprises a water collecting basin installed at the inlet end of the sedimentation tank body, communicated with the sedimentation tank body and used for collecting mud, wherein the sedimentation tank body is provided with at least two sequentially arranged sedimentation cavities, a partition plate is installed between adjacent sedimentation cavities and is provided with a chipping blocking part for the mud to pass through, the sedimentation cavity at the output end of the sedimentation tank body is connected with an inlet of a drill rod of a drilling machine through a mud delivery assembly, the drill rod of the drilling machine is inserted into the water collecting basin, and an outlet of the drill rod of the drilling machine is connected with the inner cavity of the water collecting basin. The cyclic utilization method has the advantages of cyclic utilization and rapid sedimentation. The cyclic utilization sedimentation tank has the advantages of being simple in structure, small in noise, low in cost, easy to operate, small in occupied area, small in environmental pollution and high in working efficiency.