The invention relates to a processing method of an austenitic seamless stainless steel rectangle water pipe used for a turbo-generator, which sequentially has the processing steps of hot rolling round bar, continuous extruding round pipe, drawing an elliptic pipe with a non-core bar, drawing a rectangle pipe with a short core bar, and carrying out solution treatment and annealing to obtain the finished product. According to the mass percentage, the stainless steel which is adopted by the water pipe contains carbon less than or equal to 0.030%, silicon less than or equal to 1.0%, manganese less than or equal to 2.0%, sulphur less than or equal to 0.030 %, phosphorus less than or equal to 0.035%, chromium ranging from 18.00% to 20.00%, Ni ranging from 9.0% to 13.0%, rare earth element Re ranging from 0.002% to 0.008%, silver ranging from 0.001% to 0.005%, and iron and other impurities with the residual quantity; wherein, the rare earth element is a compound which consists of 40% to 45% of Ce, 40% to 45% of lanthanum and Yt with residual quantity according to the mass percentage. The processed water pipe has good toughness, strong corrosion resistance and low magnetic permeability, and is an ideal material used for the motor stator water pipes of 1000MW-class turbo-generators.