The invention discloses a method for processing and recycling lignite upgrading tail gas. The method comprises the following steps: effectively removing dust of the tail gas produced in the lignite upgrading process, then compressing the tail gas through a tail gas compressor, introducing the tail gas into a tail gas scrubbing tower to fully wash tiny dust, gathering a large quantity of latent heat in clean saturated tail gas out of the scrubbing tower, taking the clean saturated tail gas as a preheating process medium of a heating medium, releasing heat of the saturated tail gas and changing the heat to saturated water, further recycling waste heat through the saturated water to be close to normal temperature, feeding the saturated water to a sewage treatment system, simply processing the saturated water to be taken as supplementary water of a project, and supplying residual water outside. The method is capable of effectively recycling water and waste heat in the upgrading tail gas; by fully and comprehensively using the recycled process water and the waste heat, the method meets modern coal chemical industry circular economy and energy cascade utilization concept, so that the method is especially applicable to cold and water-deficient areas such as northwest and wide in prospect.