Laser treatment is one of the technologies which are able to eliminate all the adverse effects on the environment caused by chemical treatment commonly used in textile finishing. In this research, we investigated the use of laser treatment for the purpose of wool felting shrinkage control, and compared its effectiveness with that of the traditional chlorination treatment method. The wool fabric was exposed to an industrial laser at two different power levels and two sweep speeds. We found that upon selecting the appropriate treatment parameters, the laser treatment is effective in reducing felting shrinkage of wool fiber by its etching effects on the scales of the wool fiber as shown by the scanning electron micrographs. Too high energy exposure of the wool fiber by laser radiation causes excessive fabric strength loss. We also found that the laser-treated wool has felting shrinkage reduction similar to that treated using the traditional chlorination procedure. The laser technology presents an alternative wool processing method to replace the tradition chlorine treatment method. If this technology can be applied to wool felting-proof finishing on a commercial scale, it will significantly benefit the environment by completely elaminating the harzardous chlorine compounds currently by the industry.