Sheep grow an average of 8 pounds (3.6kg) of wool each year. 

It takes a year for the sheep to grow a complete fleece of wool.

Wool is the fibre derived from the fur of animals of the caprinae family, principally sheep, but the hair of certain species of other mammals such as goats, llamas and rabbits may also be called wool. This article deals explicitly with the wool produced from domestic sheep.

Wool has two qualities that distinguish it from hair or fur: it has scales which overlap like shingles on a roof and it is crimped; in some fleeces the wool fibres have more than 20 bends per inch. Wool straight off a sheep contains a high level of grease which contains valuable lanolin as well as dirt, dead skin, sweat residue, and vegetable matter. This state is known as "grease wool" or "wool in the grease".

Before the wool can be used for commercial purposes it must be scoured, or cleaned. Scouring may be as simple as a bath in warm water, or a complicated industrial process using detergent and alkali. In commercial wool, vegetable matter is often removed by the chemical process of chemical carbanization. In less processed wools, vegetable matter may be removed by hand, and some of the lanolin left intact through use of gentler detergents. This semi-grease wool can be worked into yarn and knitted into particularly water-resistant mittens or sweaters, such as those of the Aran Island fishermen. Lanolin removed from wool is widely used in the cosmetics industry, such as hand creams. After shearing, the wool is separated into five main categories: fleece (which makes up the vast bulk), broken, pieces, bellies and locks. The latter four are pressed into wool packs and sold separately. The quality of fleece is determined by a technique known as wool classing, whereby a qualified wool classer groups wools of similar gradings together to maximise the return for the farmer or sheep owner. Prior to Australian auctions all Merino fleece wool is objectively measured for micron, yield (including the amount of vegetable matter), staple length, staple strength and sometimes colour and comfort factor.