The present paper reports the impact of thermal treatment on the characteristics of core-sheath type hybrid technical yarns. The core-sheath type hybrid yams are prepared using DREF-III technology. Polyester and glass multifilaments are used as core components whereas the cotton and polyester staple fibers are the sheath components wrapped around the core filament with different proportions to form a hybrid structure. The thermal treatment is carried out both in dry and in wet state under relaxed condition and the thermal shrinkage, sheath-slipping resistance and tensile and bending properties of hybrid yarns have been studied. Thermal treatment markedly increases the thermal shrinkage and sheath-slipping resistance of hybrid yarns with polyester multifilament in core, but insignificant effect for yarns with glass multifilament in core. Breaking elongation of hybrid yams with polyester multifilament in core increases with treatment temperature. The hybrid yarns with glass multifilament in core are least affected by thermal treatment.