The purpose of this study was to develop a finishing process to improve the shrinkage and anti microbial properties of woolen fabrics. First, polyurethane (PU) prepolymers were synthesized from poly(ethylene glycol) (PEG) of different molecular weights. Next, the PU prepolymers were mixed with chitosan to form blended polymers. Then, these blended polymers were used to treat woolen fabric in a compound process to determine if they could modify the fabric, making it more resistant to shrinkage and bacteria. Our experimental results indicate an improvement in both the shrink-proof and antimicrobial properties of the fabric with an increase in the temperature or duration of the heat treatment, as well as with an increase in the concentration of the processing agent. However, the yellowing and softness tendency of the fabric shifted towards the opposite, unfavorable direction. The treatment also seems to somewhat improve the strength of the fabric. Furthermore, our results show that the addition of chitosan remarkably increased the shrink-proof and antimicrobial properties of the treated fabric. Finally, the blended polymer made of PEG with a molecular weight of 600 and chitosan gave the best results of the polymer combinations tested. (C) 2003 Wiley Periodicals, Inc.