A wool-degrading bacterium was isolated from decomposition wool fabrics in China. The strain, named 3096-4, showed excellent capability of removing cuticle layer of wool fibers, as demonstrated by removing cuticle layer completely within 48 h. According to the phenotypic characteristics and 16S rRNA profile, the isolate was classified as Pseudomonas. Bacteria growth and keratinase activity of the isolate were determined during cultivation on raw wool at different temperatures, initial pH, and rotation speed using orthogonal matrix method. Maximum growth and keratinase activity of the bacterium were observed under the condition including 30 °C, initial pH 7.6, and rotational speeds 160 rpm. The keratinase-containing crude enzyme prepared from 3096-4 was evaluated in the treatment of wool fabrics. The optimal condition of our enzymatic improvement of shrink resistance was the combination of 30 °C, initial pH 7.6, and rotation speeds 160 rpm. After the optimized treatment, the wool fabrics felting shrink was 4.1% at 6 h, and textile strength was not lost.