The invention discloses luminous coating fabric and a processing method thereof. The method comprises the following steps of: a, preparing luminous slurry: adding 30 to 40 percent luminous powder solvent into 60 to 70 percent inorganic pigment hydrosol, stirring the mixture uniformly, then adding 50 percent color fixing agent, 10 percent stabilizing agent, 15 percent thickening agent and 15 percent softening agent into the mixture in turn for harmonious blending, and stirring the mixture for 1 to 2 hours; and b, uniformly coating the luminous slurry on the plane layer of fabric in a screen printing mode, and then thermally baking the fabric at the temperature of between 130 and 150 DEG C and the row speed of 35 to 40 meters per minute to obtain the luminous coating fabric. Compared with the prior art, because the luminous powder is dyed on the fabric in the screen printing mode, the luminous coating fabric provided by the invention has the advantages of good air permeability, good handfeel, fading resistance, color loss resistance, cleaning property and the like; the processed fabric has no essential difference compared with the fabric before processing, so the texture of the fabric is not affected; and the processed fabric has no toxicity, harm or radioactivity, can be continuously luminous for over 10 hours in dark, can be infinitely recycled, and has stable luminous performance.