Biocompatibility and biodegradability of natural compounds attracted researchers to utilize them toward healthy environment, and so for the production of ecofriendly textiles. The present study reports a cleaner production approach to develop bioactive textiles via the application of Acacia nilotica, Terminalia arjuna, and Adhatoda vasica natural dyes. Colorimetric characteristics, sun protection and antioxidant properties of bioactive wool fabrics have been evaluated. Evaluation of these characteristics with the effect of iron pre‐mordanting was also assessed. A broad range color palette is obtained with good fastness results to washing and rubbing. Sun protection properties of developed bioactive wool fabrics were assessed in terms of ultraviolet protection factor (UPF) and UV transmittance in ultra‐violet region (UV‐A and UV‐B), relative to un‐dyed wool fabrics. Antioxidant properties of developed wool fabric were determined in terms of % inhibition of peroxidation by ABTS (2,2′‐Azino‐bis(3‐ethylbenzothiazoline‐6‐sulphonic acid)) radical scavenging activity. Transmittance values of <5% and >40% inhibition of peroxidation demonstrates the use of promising natural multifunctional finishing agents from A. nilotica, T. arjuna, and A. vasica natural dyes for the development of bioactive textile fabrics. © 2019 American Institute of Chemical Engineers Environ Prog, 38:e13146, 2019