The effect of annealing treatment on the microstructure and properties of cold-drawn Invar alloy wires (with a strain ε = 2.29) was investigated. The results indicate that within the temperature range of 400–550 °C, both tensile strength and plasticity increase with rising annealing temperature. Below 400 °C, only plasticity improves; above 550 °C, however, the Invar alloy wires undergo softening. In the range of 350–650 °C, the thermal expansion coefficient of the Invar alloy wires exhibits a trend of first increasing and then decreasing. During annealing, (Mo,V)C precipitates form in the Invar alloy, and the deformed microstructure undergoes recovery and carbide precipitation during annealing. The dislocation recovery improves plasticity, while the precipitates increase strength and reduce the solute element content in the matrix, thereby enhancing the thermal expansion stability of the matrix. When annealed at 550 °C for 2 h, the Invar alloy wire simultaneously possesses high tensile strength and elongation (1275 MPa and 14.5 %, respectively) as well as a low thermal expansion coefficient of only 3.2 × 10−6/K.