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Most fabrics are woven, meaning they are constructed on a loom and have interlocking warp (the thread or fiber that is strung lengthwise on the loom) and weft (the thread that cuts across the warp fiber and interlocks with it) fibers that create a flat piece of fabric. Felt is a dense, non-woven fabric and without any warp or weft. Instead, felted fabric is made from matted and compressed fibers or fur with no apparent system of threads. Felt is produced as these fibers and/or fur are pressed together using heat, moisture, and pressure. Felt is generally composed of wool that is mixed with a synthetic in order to create sturdy, insulating felt for craft or industrial use. However, some felt is made wholly from synthetic fibers.

Felt may vary in width, length, color, or thickness depending on its intended application. This matted material is particularly useful for padding and lining as it is dense and can be very thick. Furthermore, since the fabric is not woven the edges may be cut without fear of threads becoming loose and the fiber unraveling. Felted fibers generally take dye well and craft felt is available in a multitude of colors while industrial-grade felt is generally left in its natural state. In fact, felt is used in a wide variety of applications both within the residential and industrial contexts. Felt is used in air fresheners, children's bulletin boards, craft kits, holiday costumes and decorations, stamp pads, within appliances, gaskets, as a clothing stiffener or liner, and it can be used as a cushion, to provide pads for polishing apparatus, or as a sealant in industrial machinery.

Felt may be the oldest fabric known to man, and there are many references to felt in ancient writings. Since felt is not woven and does not require a loom for its production, ancient man made it rather easily. Some of the earliest felt remains were found in the frozen tombs of nomadic horsemen in the Siberian Tlai mountains and date to around 700 B.C. These tribes made clothing, saddles, and tents from felt because it was strong and resistant to wet and snowy weather. Legend has it that during the Middle Ages St. Clement, who was to become the fourth bishop of Rome, was a wandering monk who happened upon the process of making felt by accident. It is said he stuffed his sandals with tow (short flax or linen fibers) in order to make them more comfortable. St. Clement discovered that the combination of moisture from perspiration and ground dampness coupled with pressure from his feet matted these tow fibers together and produced a cloth. After becoming bishop he set up groups of workers to develop felting operations. St. Clement became the patron saint for hatmakers, who extensively utilize felt to this day.

Today, hats are associated with felt, but it is generally presumed that all felt is made of wool. Originally, early shockproof felt was produced using animal fur (generally beaver fur). The fur was matted with other fibers—including wool—using heat, pressure, and moisture. The finest hats were of beaver, and men's fine hats were often referred to as beavers. Beaver felt hats were made in the late Middle Ages and were much coveted. However, by the end of the fourteenth century many hatmakers produced them in the Low Countries thus driving down the price.

The North American continent was home to many of the beaver skins used in European hatmakers' creations in the eighteenth and nineteenth centuries. North American Indians' second-hand skins, replete with perspiration, felted most successfully and were in extraordinary demand for hatmaking in both the New and Old Worlds. The beaver hat was surpassed in popularity in the second half of the nineteenth century by the black silk hat, sometimes finished to resemble beaver and referred to as beaver-finished silk.

The steps included in making felt have changed little over time. Felted fabric is produced using heat, moisture, and pressure to mat and interlock the fibers. In the Middle Ages the hatmaker separated the fur from the hide by hand and applied pressure and warm water to the fabric to shrink it manually. While machinery is used today to accomplish many of these tasks, the processing requirements remain unchanged. One exception is that until the late nineteenth century mercury was used in the processing of felt for hatmaking. Mercury was discovered to have debilitating effects on the hatter causing a type of poisoning that led to tremors, hallucinations, and other psychotic symptoms. The term mad hatter is associated with the hatmaker because of the psychosis that stemmed from the mercury poisoning. Hats of wool felt remain quite popular and are primarily worn in the winter months.