The invention belongs to the field of stainless steel, and particularly relates to high-performance soft magnetic stainless steel and a manufacturing method thereof. The soft magnetic stainless steel comprises the following components in percentage by weight: less than or equal to 0.02% of C, 1.5-2.5% of Si, less than or equal to 0.8% of Mn, less than or equal to 0.03% of P, more than or equal to 0.15-0.35% of S, less than or equal to 0.4% of Ni, 13.0-15.0% of Cr, less than or equal to 0.02% of N, 0.2-0.8% of Mo, 0.15-0.30% of Nb, 0.005-0.012% of Re and the balance of iron and inevitable impurities. The preparation method comprises the steps that waste stainless steel is sequentially subjected to electric furnace smelting, AOD refining, LF refining, continuous casting, rolling and annealing, and the stainless steel is obtained. The stainless steel manufactured through the method is excellent in soft magnetic performance, high in saturation flux density and low in coercive force and residual magnetic flux density; meanwhile, stainless steel is good in corrosion resistance, and can work under various severe conditions; the stainless steel manufactured by the invention also has good machinability and good plasticity, and is beneficial to drawing and turning of downstream customers. In addition, the yield of the product prepared through the preparation method reaches 96% or above.