The present invention discloses an input/output (I/O) signal processing circuit and processing method. The I/O signal processing circuit includes a level adjustable I/O circuit and an adjustment circuit. The I/O signal processing circuit includes an output driver and/or an input comparator. The output driver transmits an output signal via a signal transmission line according to an output data. The output driver has an adjustable high operation voltage level and an adjustable low operation voltage level, which determine a high level and a low level of the output signal, respectively. The input comparator receives an input signal via the signal transmission line and comparing the input signal with an adjustable reference voltage, so as to generate an input data. The adjustment circuit generates an adjustment signal according to voltage drop related information, to correspondingly adjust the adjustable high and low operation voltage level and/or the adjustable reference voltage.