Microstructure evolution and phase transformation of β phase Ti40 alloy before and after hydrogenation were investigated by XRD, OM, SEM, EDX and TEM. The results show that the amount of matrix β phase decreases while the modified β with the same bcc structure but different elemental composition increases gradually as the hydrogen content increases; the small particles of η phase appear around the grain boundaries when the hydrogen content reaches above 0.3%. The structure of η phase is fcc and the lattice constant is 0.4377 nm. The composition of η phase is Ti: V: Cr = 38.10: 35.16: 26.66. The hydrogenation and phase transformation of Ti40 alloy can be concluded as β→βH for low hydrogen content (≤0.2wt%) and β→βH+modified β+η for high hydrogen content (>0.3wt%)