Historically, wool follicle density and fibre diameter have been measured in skin sections using a projection microscope. The aim of this study was to assess the use of computer‐assisted image analysis (IA) for measuring follicle density and fibre diameter from skin sections. Shrinkage correction factors, primary, secondary, and total follicle densities, and fibre diameter measurements, determined manually (M) by projection microscope and by IA, were compared to assess the differences between the methods. The repeatability of sample and field measurements and operator variation were determined for the IA method. IA and M measurements compared favourably with the exception of the correction factor and the sample repeatability measurement of primary follicle density. The results of this study indicate that IA measurement of follicle density and fibre diameter is both fast and comparable to the manual method, though it is essential to use skilfully prepared preparations.