A new annular photocatalytic reactor was designed for the removal of indoor formaldehyde. Three fins were added to the reactor and each fin had a triangular gap at one end, making this type reactor continuous and single-pass. The influence of fins on formaldehyde removal was examined in an airtight environmental chamber. The radiation and velocity fields of the reactors were simulated by using computational fluid dynamics (CFD) methods. A theoretical model for the degradation of formaldehyde in a recirculating system was proposed. When adding fins in the annular reactor, the reaction area and residence time were greatly increased, and the degradation rate was, therefore, obviously enhanced. The CFD simulation results showed that the radiation intensity on the internal surfaces of the exterior cylinder was nearly uniform except for the two ends and it decreased slightly for the reactor with fins. The velocity distribution was uniform in the first tube pass and became actually higher near the elbows. The UV intensity was weak while the velocity was large near the elbows, which had a negative effect on degradation efficiency there. The results obtained from the kinetic model were in agreement with experimental data. So the degradation behavior of formaldehyde could be predicted by using this kinetic model.