A process for producing composite yarns comprises the steps of first wrapping a second yarn around the perimeter of and along the length of a first yarn and then heating the yarn intermediate produced by such wrapping to produce a composite yarn. When a heat-shrinkable yarn is used in producing such a composite yarn, the shrinkage of the heat-shrinkable yarn enables the production of composite yarns possessing aesthetic qualities similar to those exhibited by yarns produced by much more complicated processes, such as boucle and chenille yarns.
