Modification of cotton non-woven fabrics through the hydroxyethylation of cellulose using 2-chloroethanol (CE) was carried out in a two-step process of sodium hydroxide pre-treatment and CE reaction in a reaction medium of isopropyl alcohol (IPA) aqueous solution. The effects of sodium hydroxide concentration in the pre-treatment, IPA and CE concentrations, and treatment conditions of the second step were analyzed, along with washing media after treatment on the reacted amounts (add-ons) of CE and property changes of the fabrics. The add-ons of modified samples pre-treated with sodium hydroxide solution of a constant concentration and reacted with CE of different concentrations increased, reached a maximum, and then decreased with increasing CE concentration. The maximum add-on, i.e., the most effective reaction, was obtained when the molar ratio of NaOH/AGU in the pre-treatment and that of CE/AGU in the second treatment was similar. The moisture regain of the modified fabric increased almost linearly with the add-on of CE, indicating increased hydrophilicity. The hydroxyethylated fibers in the modified fabric with high add-ons were damaged severely and stuck together when the modified fabric was washed with water. However, the modified fibers obtained by washing with IPA solutions maintained their fiber shape with increased diameter even at a high add-on of up to 30%. Although the individual fibers might be deteriorated by hydroxyethylation, the tensile strength of the modified non-woven fabric obtained by washing with IPA solution increased compared to the untreated sample, because of the increase in diameter of the fibers, and thus the increased entanglements of the fibers in the fiber assembly of the non-woven fabric. Apparent dye uptake, as measured by the K/S value, of the hydroxyethylated fabric dyed with a reactive dye also increased linearly with increasing add-on amount. The K/S value of a modified fabric with an add-on of 3.5% was four times higher than that of the untreated sample, indicating that the microstructure of the cotton fiber was affected dramatically by hydroxyethylation.