A fuel pellet and a manufacturing method thereof are disclosed. The method includes S1) weighing raw materials including 0-2% of chromium trioxide, 0-2% of alumina, 0-2% of silicon oxide and 0-2% of niobium pentoxide, with the balance being uranium dioxide; S2) ball milling and fully mixing the raw materials to form a powder mixture; S3) compressing the powder mixture to form a uranium dioxide blank, and subjecting the blank to high-temperature pre-sintering; S4) crushing the blank, sieving the crushed blank, and grinding the crushed blank into uranium dioxide particles; S5) adding beryllium oxide powder into the uranium dioxide particles, mixing the mixture to form powder to be compressed, with each uranium dioxide particle being covered with a cover layer formed from the beryllium oxidepowder; and S6) subjecting the powder to be compressed to compression molding and densification sintering to obtain the fuel pellet. A manner of two times of compound addition and two times of sintering is adopted, and therefore sintering aids form solid solution or are distributed in the uranium dioxide matrix, diffusion or solid solution formation of the sintering aids into the beryllium oxide is reduced, and on the premise that the sintering aids do not influence heat conductivity of the BeO phase, the pellet crystal grain size is effectively increased, and sintering activity is improved.