We report the extraction of keratin nanofibers from the medulla of a parent yarn after denaturing the cuticle and cortex microstructures of a merino wool yarn. Controlled alkaline hydrolysis, followed by high-speed blending in acetic acid, allowed for the extraction of keratin protein nanofibers with an average diameter of 25 nm and a length of less than 3 μm. SEM and AFM analyses showed the removal of cuticle cells from the yarn. FT-IR and DSC analyses confirmed the hydrolysis and denaturation of the sheet protein matrix of cuticle cells. XPS analysis provided strong evidence for the gradual removal of the epicuticle, cuticle cells, and cortex of the hierarchical wool structure with an increase in alkaline hydrolysis conditions. It was confirmed that the merino wool yarn subjected to hydrolysis under alkaline conditions exposed its internal fibrillar surface. In an acetic acid medium, these fibrillar surfaces obtained a surface charge, which further supported the defibrillation of the structure into its individual nanofibrils during high-speed blending. The extracted nanostructures constitute mainly α-helical proteins. The morphology of the nanofibers is composed of a uniform circular cross-section based on the images obtained using AFM, TEM, and SEM. The extracted nanofibers were successfully fabricated into transparent sheets that can be used in several applications.