Hydrogen diffusion in the wall of hydrogenation reactor for three situations, i.e. operating, normal shutdown and abnormal shutdown, was numerically simulated based on the finite element program-ABAQUS. The formula of diffusion-induced stress was deduced for model of the thin walled cylinder. Distribution of diffusion-induced stress in the wall of hydrogenation reactor was studied. The results showed that the maximum stress was at the fusion surface between welding overlay and base metal, and which would increase with cooling rate. The crack will initiate and propagate from fusion surface to welding overlay when the diffusion-induced stress is higher than yield stress, but it will not propagate to the base metal. Diffusion-induced stress is one of the important factors for crack initiation and propagation of welding overlay of hydrogenation reactor.