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Bruce Woollen Mill Ltd chairman Gordon Riach said production at the mill started last week, once machinery had been commissioned.
"We've got plenty of orders to fill - about six to eight weeks of orders."
Lui Gundersen, formerly of carpet manufacturer Feltex and Godfrey Hirst, is the new mill manager, and started two weeks ago. He said 10 former QualitYarns employees began commissioning machinery several weeks ago, before working to fill orders. More people were due to start back next week.
Carder Graeme McLennan (64) has worked at the mill for 30 years. He started when Alliance Textiles Ltd still operated the business, and said he was glad to return to work at the mill last week, where he cards between 100kg and 115kg of wool a day.
Like Mr McLennan, Marie Jenkins (46) also began working at the mill under the Alliance Textiles banner, starting in 1984. She took a break to have children before returning, and working there for 17 consecutive years, until the mill closed last year.
Resuming work almost a month ago, had given her and her family "certainty", she said.
Mr Riach said the next step would be consolidating the business and then filling orders.
"We want to get it up to full capacity as soon as we can.
"There's a huge demand for New Zealand made products, both nationwide and overseas, particularly Australia."
Australian knitters and weavers were in a similar position to those in New Zealand, as most yarn producers had moved operations to China where overheads were lower.
"There's a lot of opportunities for the mill, but there has to be the finance to back it up. It truly is a unique mill, with a range of yarns produced there."
Christchurch based Wool Equities Ltd owns a 77% stake in Bruce Woollen Mill Ltd and the balance of the shares is held by 11 other textile businesses, who formed the consortium behind the purchase of the mill. The company purchased the bulk of the operating assets of QualitYarns Ltd, the former wool spinning company based in Milton.
The Bruce Woollen Manufacturing Co was established in 1897, to scour, card and spin and weave wool into yarn, blankets, rugs and clothing fabric. Bought by Alliance Textiles in 1962, the mill closed 37 years later in 1999, before it was bought by QualitYarns Ltd.
QualitYarns issued redundancy notices to its 28 staff in November last year.