Degradation of Bi4Ti3O12 ferroelectricity during forming gas annealing is investigated by the first-principles method based on the density functional theory(DFT) the generalized gradient approximation(GGA). We calculate the variations of total energy with the displacement of Ti along the c axis, electron density and total density of states in hydrogen-free and hydrogenated models. The results show that the electron densities of Ti-O and Bi-O exhibit significant changes between the Bi4Ti3O12 ferroelectric phases for the hydrogenated and hydrogen-free cases, and the strong hybridization between H and O is favorable to the formation of a convalent bond. The total energy of ferroelectric phase for the hydrogenated case is bigger than that of paraelectric phase because hydrogen incorporation into the lattice has a direct effect on polarization pinning by possibly forming a hydroxyl bond. This demonstrates that hydrogen introduction during forming gas annealing hinders the phase transition of the Bi4Ti3O12 from tetragonal paraelectricity to orthogonal ferroelectricity, and electrical conductivity of Bi4Ti3O12 is increased. This may be an important factor causing severe degradation of Bi4Ti3O12 ferroelectricity.