Nowadays, waste management is gaining popularity to reduce the environmental impact made by human beings. There is a dire need to decrease the pollution caused by plastic materials. A gradual rise in the demand for polyester bottles has generated a need to recycle these materials. In the present work, an aromatic amine (4,4′‐(1,4‐phenylenebis(1,3,4‐oxadiazole‐5,2‐diyl)) dianiline) was prepared from the polyester bottle waste. The successful synthesis and chemical structure of the amine was confirmed by various characterization techniques such as Fourier transform infrared spectroscopy (FTIR), proton nuclear magnetic resonance spectroscopy (1H NMR), and 13C NMR. The amine was diazotized and coupled with H‐acid (4‐amino‐5‐hydroxy‐2,7‐naphthalene disulfonic acid)‐treated wool fabric to generate acid dye in situ on the fabric. The coloration (L*, a*, b*, and K/S) and fastness properties of dyed wool were evaluated, and the samples were further analyzed for antibacterial and UV‐protective properties. The dyed wool was also characterized by FTIR to confirm the presence of the aromatic group of the dye. The introduction of dye structure on the wool increased the thermal stability of the fabric, which was confirmed through thermogravimetric analysis analysis. Antibacterial activity (>70%) and excellent UV protection were retained by dyed wool after 20 washes. Furthermore, the dyed wool was found nontoxic under the cytotoxicity evaluation test.