Abstract: Exploiting the reciprocity of wireless multipath channel in time division system, this paper extracts the information of channel phase as secret keys to propose a secret key generation and distribution scheme for two-way sparse multipath relay channels. The recovery algorithm based on compressive sensing theory is used for the channel estimation, because the wireless multipath channels are generally sparse. The two-way relay channel can be decomposed into two independent end to end channels by the orthogonal pilots design in the end nodes, and the relay broadcast the pilots and the XOR of secret keys by using the physical layer network coding. By using our proposed scheme, the secret key generation and distribution can be realized in two slots, thus we can overcome the drawback of the key pre-distribution mechanism and ensure the safety of keys. Theoretical analysis and simulation results show that our proposed scheme can effectively realize the secret key generation and distribution in the two-way sparse multipath relay channel and ensure the security of the physical layer communication.