A few hours of hanging removes the worst of the wrinkles from the flag, especially if the environment is humid. You can also hang the flag in your bathroom, and run the shower to steam out the fabric.
If hanging the flag does not purge the wrinkles, spritz the fabric with a water nozzle, or flick water onto it with your fingers.
If gentle dampening does not remove the wrinkles, wash your flag instead. Some flags are machine washable. Put the flag in the washer, and select a gentle cycle with cold water. Hand wash your flag if preferred, but use cold water and mild soap.
Once the flag has finished washing, remove it from the washer immediately. If you hand washed the flag, remove it from the basin right away so new wrinkles do not form.
Dry your flag by hanging it flat or by lying it flat on some absorbent towels. Allow the flag to dry completely before folding it for storage.