In this paper, warm-water flax retting was used as a pretreatment method for banana-fibre extraction. To determine the optimum conditions for flax retting, the physical properties of various parts of stems and fibres in the process of flax retting were analysed. By studying the tensile strength, elongation at break, diameter, moisture regain, and other characteristics of the fibres, the influences of bacteria and enzymes in the retting liquor on the fibre characteristics in different retting stages were determined. Through mechanical-property tests and microscopic observation of the stem skin, the change rules of the mechanical properties and degumming state of the stems were examined. The results showed that the fibre tensile strength of banana stems reached the maximum value of 45 ± 16 cN·tex−1 after 11 days of retting. As most resins had not been hydrolysed, fibre extraction was difficult. After 21–25 days of retting, the tensile strength of fibres was about 34 ± 10 cN·tex−1, elongation at break was about 1.71%, and moisture regain was about 13.56%. The fibre characteristics met the process requirements, and the tensile separation stress of the stem was small, about 0.034 MPa. This time point could be used as the optimum endpoint for retting flax in warm water, which could provide theoretical support and research basis for the recycling of banana straw. The functional groups of the extracted fibres were studied by FTIR, which confirmed the observed change rule of each component during degumming. The experimental results showed that a longer retting time corresponded with a lower content of fibre impurities, more thorough degumming, and less difficult extraction; however, strength and toughness decreased.