To provide a method for producing a paper yarn by converting the yarn from its flat shape to a rounded shape for increasing the paper yarn strength to improve the productivity and using property in its weaving/knitting processes for solving a problem such that since the flat paper yarn produced by cutting the paper produced as a rolled state by using mainly manila hemp as a raw material has a weak paper strength as it is, yarn cutting takes place frequently caused by the change of tension, etc., on releasing it.

This method for processing the paper yarn comprises preventing the yarn cutting by releasing the flat paper yarn 3 obtained by cutting the paper so as to have a narrow width so as to have the narrow width from a package 4 through a flyer 6, imparting mixed liquid of water and a water soluble surfactant by bringing the flat paper yarn 3 obtained by cutting the paper so as to have the narrow width in contact with a roller 11, false-twisting the paper yarn in flexible and moist state while sending with a top roller 15 and bottom roller 17 by repeating grip and release to obtain the yarn having a form of joining an S-twisted part, a non-twisted part and a Z-twisted part caused by unevenness in twisting, and squeezing the yarn by a specific yarn passage guide 23 installed with a V-shaped groove in its circumferential direction to make the yarn having a folded and crushed form.