The present invention provides a method of manufacturing a mercury-free zinc-alkaline battery giving no environmental pollution and having an excellent shelf stability which comprises a corrosion-resistant zinc alloy as an anode active material, an indium compound having appropriate properties, an aqueous alkaline solution as an electrolyte and optionally a fluorine-containing surfactant having the specified chemical structure. The indium compound is indium hydroxide or indium sulfide prepared by neutralizing an aqueous solution of an indium salt. The surfactant has a hydrophilic part of a polyethylene oxide and an oleophilic part of a fluoroalkyl group. The zinc alloy contains a proper amount of at least one of the group of indium, lead, bismuth, lithium, calcium and aluminum. The indium hydroxide or indium sulfide is present in an amount of 0.005 to 0.5 wt % and the surfactant in an amount of 0.001 to 0.1 wt %, based on the weight of the zinc alloy, respectively. Furthermore, the indium hydroxide and indium sulfide in a powder form contain 60 wt % or more of particles having a particle size of 0.5 to 8 .mu.m. The indium hydroxide has a weight loss of 18 to 30 wt % when thermally decomposed at up to 900.degree. C. and a powdery X-ray diffraction pattern having peaks at 4.71.+-.0.10 .ANG., 3.98.+-.0.02 .ANG., 3.57.+-.0.10 .ANG. and 2.66.+-.0.02 .ANG..