The approaches for cotton shrink-resistant finishing can be categorized into chemical finishing and physical finishing. In this research, a new approach to prevent cotton fabric from shrinkage and wrinkling without resin finishing was studied to reach an easy care effect of “wash-and-wear” for related end products. It was achieved by adding a certain proportion of fine denier polyester and memory polyester fibers. Unlike the previous chemical finishing methods, this physical finishing method does not cause yellowing, formaldehyde content increase or strong damage of tensile strength. It can reduce the shrinkage rate and increases the wrinkle recovery angle (WRA) through the shape memory formed by the memory polyester fiber in the heat setting stage. Our results were of better condition with significant improvements in WRA, anti-pilling effect, shrink-proofing and strength of the fabrics. The fabrics can be widely used in bedding textiles and shirting fabrics.