The invention discloses a downhole hydraulic reverser which comprises an outer reverser sleeve and an inner reverser sleeve, wherein a plug is arranged in the middle section of the inner reverser sleeve; a threaded hole used for connecting a coiled tube is formed in the upper end of the plug; an upper pressure chamber and a lower pressure chamber located above and below the plug are formed between the inner wall of the outer reverser sleeve and the outer wall of the inner reverser sleeve; an upper pressure transfer through hole communicated with the upper pressure chamber is formed in the side wall of the upper section of the inner reverser sleeve; a lower pressure transfer through hole communicated with the lower pressure chamber is formed correspondingly in the side wall of the lower section of the inner reverser sleeve and the threaded hole of the plug; human-shaped sliding grooves are formed in the outer wall of the middle section of the inner reverser sleeve; sliding steel nails matched with the human-shaped sliding grooves are arranged on the inner wall of the outer reverser sleeve. According to the downhole hydraulic reverser, the technical problems of a radial jet drilling technology during reversing operation are solved, and the success rate and efficiency of the radial jet drilling technology are increased.. The invention further discloses a drilling reversing method.