Textile yarns are subjected to numerous types of forces during knitting, usually leading to yarn damages, such as decrease in tensile, bending, shearing, and surface properties, which are closely related to different yarn properties, knitted structures/actions, and machine settings. This article comprehensively evaluated yarn damages in the computerized flat knitting process. Five different commercially available and commonly used yarns including cotton, wool, polyester, acrylic, and viscose were selected as raw materials, and the tensile, bending, shear, and frictional properties were investigated and compared before knitting and after being unraveled from plain- and rib-knitted fabrics, respectively. The results show that knitting actions/structures exhibit different damage extents for all different raw materials. It has been observed that the modulus is declined by 3–30% for bending, 2–10% for tensile, and 8–80% for shearing due to flat knitting action, respectively. The frictional coefficient of yarns also increased from 6 to 23%. As compared to yarn before knitting, the yarns unroved from plain and rib structures have been damaged to a great extent as a result of the loss of mechanical properties. The results are completely in agreement with the statistical analysis that clearly represents the significant loss in yarn properties during the knitting process. The microscopic analysis of the yarns clearly illustrates the effect of knitting action on yarn surface and mechanical properties. For yarn’s cross-sectional shearing properties testing, this article self-designed an innovative “Yarn Shear Testing Device.” The methodology and results are of great importance for improving the quality of knitted products, evaluating knitting yarns’ knittability, and in the development of high-performance technical textiles.