This paper focuses on the finite element method for Caputo‐type parabolic equation with spectral fractional Laplacian, where the time derivative is in the sense of Caputo with order in (0,1) and the spatial derivative is the spectral fractional Laplacian. The time discretization is based on the Hadamard finite‐part integral (or the finite‐part integral in the sense of Hadamard), where the piecewise linear interpolation polynomials are used. The spatial fractional Laplacian is lifted to the local spacial derivative by using the Caffarelli–Silvestre extension, where the finite element method is used. Full‐discretization scheme is constructed. The convergence and error estimates are obtained. Finally, numerical experiments are presented which support the theoretical results.