The invention discloses a manufacturing method of a micro-fine silver alloy bonding wire for small wafer LED packaging. The manufacturing method comprises the following steps that 1, smelting and continuous casting of a silver alloy bonding wire blank are conducted; 2, drawing of a silver alloy wire is conducted; 3, intermediate heat treatment of the silver alloy wire is conducted; and 4, the silver alloy wire subjected to intermediate heat treatment is manufactured into a silver alloy wire body with the diameter being 0.06-0.08 mm through a wire drawing machine in a drawing mode. According to the manufacturing method of the micro-fine silver alloy bonding wire for small wafer LED packaging, the defects of low strength and poor oxidation resistance of a bonding silver wire and other bonding silver alloy wires are overcome by optimizing alloy components, and the cost is effectively reduced; by using the vacuum melting ultrasonic vibration continuous casting technology, the alloy performance and the alloy consistency are improved, and a high-quality alloy wire blank is obtained; the alloy structure in the machining process is controlled through appropriate intermediate heat treatment, and local stress concentration during wire drawing is reduced; and the inlet angle of a wire drawing die is further optimized, wire breaking times in the wire drawing process are decreased, and the finished product rate of the micro-fine silver alloy bonding wire is ensured.