Poly(N-isopropylacrylamide) (PNIPAAm), sericin (SS), and silver nitrate were combined to prepare an interpenetrating network (IPN) hydrogel having dual functions of temperature sensitivity and antibacterial properties. The structure and size of AgNPs in such an IPN hydrogel were characterized by the Fourier Transform Infrared spectrum (FT-IR), X-ray powder diffraction (XRD) and Transmission Electron Microscope (TEM), and the thermal properties of the IPN hydrogel were characterized by Differential Scanning Calorimetry (DSC). Based on XRD patterns, Ag+ was successfully reduced to Ag0 by SS. It was observed by TEM that the particle size of silver particles was lower than 100 nm. The glass transition temperature (Tg) of IPN hydrogel was better than that of the PNIPAAm/AgNPs hydrogels, and lower critical solution temperature (LCST) values of the IPN hydrogel were obtained by DSC i.e. 31 °C. The thermal stability of the IPN hydrogel was successfully determined by the TGA. This IPN hydrogel was then used to modify the cotton fabrics by the “impregnation” method using glutaraldehyde (GA) as the cross-linking agent. The structures and properties of IPN hydrogel modified cotton fabric were characterized by scanning electron microscopy (SEM), FT-IR, and the thermogravimetry analysis (TGA). The results show that NIPAAm was successfully polymerized into PNIPAAm, and that there were neglected new groups in the hydrogel IPN. The IPN hydrogel was then successfully grafted onto cotton fabrics. SEM observations showed that the IPN hydrogel formed a membrane structure between the fibers, and improved the compactness of the fibers. At the temperature close to LCST (≈31 °C), the entire system was easily able to absorb water molecules. However, the hydrophilicity tended to decrease when the temperature was higher or lower than the LCST. The antibacterial rates of the modified cotton fabric against S. aureus and E. coli were as high as 99%.