We developed a fluidized bed-chemical vapor deposition (CVD) reactor for a novel method of particle processing, such as particle coating and surface treatment. Microwave plasma was applied as an excitation source of reactive gases, and alumina and silicon were used as bed materials. The hydrodynamic behavior of the plasma-bubbling fluidized bed was studied and the field of plasma generation was investigated optically. Only minor plasma generation was noted in the dense phase. Plasma emission was observed in most of the bubbles in the alumina-fluidized bed, while plasma generated at the surface of the silicon-fluidized bed where bubbles splashed. Methane conversion was carried out in the alumina-fluidized bed as a model reaction. Although excitation of methane occurred in bubbles, excited species entered into the dense phase from bubbles and were effectively converted to carbon on the surface of the particles. Thus, heterogenous CVD on the surface of particles may occur in this reactor.