The present invention discloses a processing method of a low-elasticity, wrinkle-free knitted fabric, which includes steps: greige cloth weaving, boiling and bleaching, bio-enzyme washing, dyeing, softening, dehydration, scutching, drying, shaping and preshrinking. The present invention is characterized in that the processing steps of pre-relaxation and ammonia mercerization are added before boiling and bleaching, so that the whole processing steps are changed as greige cloth weaving, pre-relaxation, ammonia mercerization, boiling and bleaching, bio-enzyme washing, dyeing, softening, dehydration, scutching, drying, shaping and preshrinking; the pre-relaxation processing is to add refining agent of 0.5 to 1.5g / L, the processing temperature is between 90 and 130 DEG C, and the processing period is twenty to sixty minutes; in the step of ammonia mercerization, the pre-relaxed fabric receives the processing of ammonia mercerization in an ammonia mercerizing machine at the speed of 15 to 50m / min. The present invention ensures that the cotton and the blended elastic knitted fabric can have soft, smooth handfeel and high washing resistance and shape-keeping property.