Studying textile production in the middle Guadiana basin between the 7th and 5th centuries BC, this article reveals the significance of textiles for the development and change of economic complexity in rural societies in Iron Age south-western Iberia. Textiles were at the very heart of the economic transformation of the area in this period. The functional properties of textile tools and their implications for manufacturing different types of threads and woven textiles show that in the 7th and 6th centuries BC the production of textiles was household-based and mostly for self-consumption. From the late 6th century and especially in the 5th century BC, however, the increasing specialisation of textile production and the appearance of workshops heralded new economic relations. By examining textile production and artisans’ skills and knowledge, this study reconsiders our understanding of craft production, societal change, and economic complexity among the rural societies of Iron Age Iberia.