The invention provides knitted fabric containing cotton and having silky luster, handfeel and cool feeling and a manufacturing method thereof.The method includes the following steps that yarn is woven into gray fabric with a circular knitting machine, wherein the needle number of the circular knitting machine is 18-40, the yarn count is 20-80 S/1, length 50 C of the yarn is 90-200 mm, and the gram weight of the gray fabric is 60-240 g/m<2>.The tissue structure of the gray fabric includes tabby, half cardigan, knitted cotton, rib, looped pile and ball wool or jacquard weave; open width alkali mercerizing, boiling-off, enzyme washing, dyeing, drying, soft stabilized finishing and preshrinking are conducted to finally obtain the knitted fabric containing cotton and having silky luster, handfeel and cool feeling.The knitted fabric containing cotton and having silky luster, handfeel and cool feeling has the advantages of being smooth, stiff, good in drapability, resistant to crease and small in shrinking amount and integrates smoothness, stiffness and crease resistance.