I have always loved the idea of crocheting and knitting with unusual “yarn” sources. I have made napkin rings by knitting wire and a fluffy bathroom rug out of fleece. Those projects had such fun results, so I turned to fabric yarn again when I wanted to make a cover for plain and uncomfortable kitchen stool.
Here are the steps I used to make yarn from a piece of knit fabric.
My fabric was 2.5 yards long, so I continued using these steps for a few cuts at a time, and crocheted with whatever length I cut until I ran out. Then I made a few more cuts and so on. I found this method easier than trying to wind all of that fabric into a ball. Also you won’t cut fabric that you don’t need, so you can save it for another project.