The invention discloses a highly flexible cable for a drag chain and a manufacturing method thereof. An oil-resistant rubber insulating layer is wrapped on the periphery of a stranded copper conductor in an extruding way to form an insulating core wire; a plurality of insulating core wires are re-stranded into an insulating core wire bundle; a plurality of insulating core wire bundles are arranged around a highly elastic torsion-resistant reinforcing core in a way of a concentric circle and are stranded into a cable core; and an oil-resistant sheath is wrapped on the periphery of the cable core in the extruding way. The insulating layer comprises the following raw materials in parts by weight: 15 parts of ethylene propylene rubber K21, 15 parts of chlorinated polyethylene rubber CM352, 0.5 to 0.6 parts of vulcanizing agent DCP, 0.2 to 0.3 parts of vulcanizing agent TAIC, 0.3 to 0.5 parts of anti-aging agent MB, 0.1 to 0.3 parts of anti-aging agent RD, 1.0 to 2.0 parts of paraffin oil, 1 to 2 parts of chlorinated paraffin-52, 0.5 to 1.0 part of microcrystalline wax, 1.5 to 2.5 parts of active magnesium oxide, 0.4 to 0.7 parts of calcium stearate, 10 to 15 parts of ultrafine talcum powder, 1 to 2 parts of gas phase method white carbon black, 6 to 8 parts of calcined clay and 0.2 to 0.4 parts of coloring agent. The cable is good in insulating and mechanical performances and is oil-resistant.