To be made into fabric, wool undergoes several processes. The fleece is sheared from the sheep, scoured, carded, combed and spun into yarn. The yarn is then woven on a loom to create wool fabric. There are two types of wool yarn that make different fabrics: woolen and worsted.

Sheep are sheared once a year by professionals who shear the whole fleece in one piece. The fleece is moved to a wool table, which has slats spaced apart to allow shorter wool and debris to fall underneath. Twigs, leaves and undesirable parts of the fleece are removed by hand, and the remaining fleece is folded and rolled.

The fleece is examined and graded according to the length, diameter, strength, crimp and color of its individual fibers. Finer wool is used to make worsted fabric for suits and other garments, while coarser wool is made into woolen fabric for coats, jackets and rugs. Fleeces of the same grade are mechanically pressed into bales and stored ready for transportation.

Raw fleeces contain lanolin, which makes them greasy, and they will still hold vegetable matter from the fields. Scouring cleans the wool and removes the lanolin by raking it in baths of hot water, detergent and alkali. The wool is rinsed, squeezed by rollers and dried.

To make wool from multiple fleeces more regular in fiber size and color, the clean wool from different batches is mechanically mixed.

The mixed and washed wool consists of tufts of tangled fibers. A carding machine smoothes the fibers by brushing the wool over a series of rolling drums covered in pointed teeth. The drums are different sizes and rotate at different speeds, so as the wool progresses its fibers are aligned into a fine web.

Shorter wool fibers are used to make woolen yarn, which makes a rough, hairy fabric. After carding, the wool is gently twisted into ropes, ready for spinning into woolen yarn.

Finer, longer wool fibers are used to make worsted yarn, which makes a smooth, soft fabric. The carded wool is combed and drawn by passing over a series of tines to remove shorter fibers and comb long ones parallel, forming a long continuous rope called a sliver.

Woolen and worsted wool are both processed by machines that draw out the ends of the fibers and spin them together by twisting at high speeds. The yarn can be spun into different thicknesses and strengths by varying the tension and direction of the twisting motion.

The yarn is woven into fabric on looms, computerized machines that work at high speeds to interlace horizontal and vertical sets of threads, forming a flat cloth. A set of parallel warp (vertical) threads are held taut by the loom while weft (horizontal) threads are held in a shuttle. The loom lifts the warp threads up and down in sequence, creating a space between them that the shuttle passes through at high speed; several shuttles can be used simultaneously. This action weaves the two sets of threads together at right angles and creates fabric.
Different patterns are created by lifting the warp threads in different sequences and by using different colored yarns. Types of fabric made from wool include broadcloth, gabardine, herringbone, houndstooth and tweed.

Wool can be dyed before carding or after being spun into yarn, or the finished fabric can be dyed. Fabric is treated with heat, moisture and friction to tighten the weave and shrink the fabric. To make the fabric fleecy, it is brushed to raise the nap, giving a fluffy finish. Chemical finishes can be applied to make the fabric washable by coating it with a resin film.