The invention relates to an automatic composting device for city domestic sludge and a processing method for the city domestic sludge. The automatic composting device for city domestic sludge comprises a clinker bin, a sludge spiral feeding bin, a granulating machine, a discharging machine and a fermentation bin, wherein a dusting mechanism is arranged at the outlet of the granulating machine; a primary fermentation part, a secondary fermentation part and a finished product part are arranged inside the fermentation bin; layers of fixing supports are respectively arranged in the three parts of the fermentation bin in a laminated manner, and a plurality of composting cylinders are inserted into the fixing supports; a lifter used for lifting the fixing supports is arranged on a side wall of the fermentation bin. According to the automatic composting device for city domestic sludge and the processing method for the city domestic sludge, a city domestic sludge processing scheme with a high added value is provided, sludge grains with clinker inner cores are used, so that the advantages of high composting efficiency and sustainable automatic production are achieved, flower cultivating soil is formed through composting, good water permeability, low probability of conglomeration and low soil aeration frequency are achieved, moreover, the sludge composting economic benefit is improved.