This document describes a system for detecting defects in fabric images using discrete wavelet transform and a K-nearest neighbor classifier. The system takes an image using a camera, converts it to grayscale, applies discrete wavelet transform to decompose the image, and then uses a KNN classifier to classify the image as defective or defect-free based on extracted features. The system is able to detect common fabric defects like vertical yarn missing, horizontal yarn missing, and stains. It is implemented using MATLAB software and uses a basic hardware setup of a camera, motor, and lighting. Test results showed the system could accurately detect different types of synthetic fabric defects in real-time images.