The alpaca comes in 22 natural color varieties, including black white gray, beige, brown, and everything in between. These colors can also be combined to produce even more beautiful colors. Alpaca fiber also works well with dyes due to its scale like texture which creates a lustrous and silky appearance. Undyed alpaca fiber is 100% biodegradeable, while dyed alpaca fibers are not unless organic and herb-based dyes are used. These natural dyes are still used today by indigenous groups in Bolivia and Peru.

Alpaca fiber has a high tensile strength making it strong and resilient and stronger than wool. The strength of its fiber does not diminish as it becomes finer. Its fiber contains microscopic air pockets which help to create lightweight garments with high insulation values. In fact it is this hollow structure which makes alpaca so warm due to its ability to trap heat. Its scaly outer structure helps to repel water and moisture while offering breathability. Alpaca fiber absorbs only 10-11% of its weight in water versus 30% for merino wool. The alpaca has a greater thermal capacity than nearly any other animal.