The effects of annealing treatments (ATs) on the microstructure of Zr-Sn-Nb alloy strips were studied. Based on the characteristics of strips for nuclear fuel assemblies, punching experiments were carried out and the formability of zirconium alloy strips was quantitatively evaluated. The results indicate that the proportions of small-angle grain boundaries of the zirconium alloy under conditions of annealing treatment at 580 °C (AT I) and annealing treatment at 620 °C (AT II) are 14.3% and 23.2%, respectively, while that of the as-received material is 12.4%. And the forming limit margin fields of the zirconium alloy under AT I can reach 0.43%, while the values of the as-received material and the AT II are -0.35% and -2.8%, respectively. The annealing process affects the evolution process of the strip recrystallization texture and the grain size. Moreover, the total texture and pole density are closely related to the degree of anisotropy of the strip. Besides, the small-angle grain boundary affects the strain path and crack expansion of the necking unit during the strip punching process, while the grain size affects the hardening exponent of the material.