Wool, silk, or a combination of the two are the traditional materials used. Synthetic materials are never used in the pile or foundation of handmade rugs. Dyed wool from Merino Sheeps is customarily found in tribal rugs, and depending on the region, will vary in quality. There are three types of wool used in creating rugs - white wool, pearl colored wool, and multi-colored wool. Black wool cannot be dyed and is therefore not used in traditional rugmaking.

The characteristics used to evaluate good wool is a thick and even texture, the curl of the wool, and the oiliness of the wool - oil prevents the strands from breaking resulting in a longer, thicker piece of wool. Top quality wool is sheared from the head, neck, back, and under the stomach of the sheep. The second best quality wool is sheared from the feet, arms, shoulders, and sides.

Oriental rugs are made with the finest and softest wool while in Turkish and Indian rugs, the wool tends to be coarser.

Most Chinese rugs are made of silk, primarily because China is the world's leading producer of both natural and manmade silk, and also because the Chinese once believed that the use of wool was a barbaric practice.

Today, the finest rugs are made of silk, and the most luxurious Persian rugs may actually feature highlights containing threads of pure gold.