The invention discloses a circulant matrix transformation based and ciphertext computation supportive encryption method. The method includes the steps: firstly, encrypting original data by means of converting the original data into vectors, then converting the vectors into a circulant matrix and encrypting through a key matrix to obtain an encrypted outsourcing matrix; secondly, encrypting computational parameters by means of converting the computational parameters into vectors, then converting the vectors into a circulant matrix and encrypting through a key matrix to obtain an encrypted computational parameter matrix; thirdly, performing arithmetic operation of an encrypting matrix to obtain an encrypted operation result; fourthly, decrypting the encrypted operation result through the key matrix to obtain a circulant matrix, and then selecting one line / column of the circulant matrix to be added to obtain a plaintext of the operation result. The method is particularly suitable for outsourcing storage and computation of confidential data in a cloud computing environment, and can be used for protecting the confidential data of persons or enterprises; the method is supportive to four-rule hybrid operation of infinite addition, subtraction, multiplication and division of encrypted numerical data.