The invention provides a knot loosening failure self-processing mechanism of a knot-tying device and a processing method thereof. The knot loosening failure self-processing mechanism comprises a knot-tying mouth arranged at the output end of a knot-tying device driving device and a knife rest. The knot-tying mouth comprises a knot-tying work end and a non-work end away from the work end. A knot loosening failed tie surrounds the work end. A groove is formed in a circular arc shaped back of the knot-tying mouth and extends to the work end. The surface, matched with the circular arc shaped back, of the knife rest is provided with a cutting knife with a blade facing the non-work end, and the cutting knife is arranged in the groove in a matched mode. When the driving device drives the knife rest to move from the work end to the non-work end, the cutting knife cuts off the knot loosening failed tie. The knot loosening failure self-processing mechanism of the knot-tying device is novel in structure, safe and reliable. A failure self-processing function is added in the knot loosening process of the knot-tying device, and the self-processing purpose is achieved by utilizing cutting of the blade during knot loosening failure.