Yarn characteristics of pure cotton, 67: 33 cotton/tencel blend, 33: 67 cotton/tencel blend and pure tencel have been studied. Blending is done at draw frame. Machinery parameters are kept constant for studying the effect of fibre parameters on yarn characteristics. It is observed that the addition of tencel increases single yarn strength significantly at the higher tencel composition. Presence of tencel improves the elongation property. Packing fraction of tencel and tencel blended yarn is found to be more than that of cotton. Swelling diameter of pure cotton yarn is found to be lower than those of pure tencel and tencel/cotton blend yarns. Hairiness (H) decreases with the addition of tencel in the blend. It is also observed that the coefficient of friction (yarn-to-metal) of blend yarn reduces with the addition of tencel fibre in the blend.