The objective of this study is to develop cotton fabrics that are capable of reversible color change in response to temperature changes and of providing an opportunity for thermal management. To achieve this objective, chitosan/sodium alginate natural polymer-walled microcapsules with a thermochromic phase change system core, produced by the complex coacervation method were applied to cotton fabrics by impregnation and exhaustion processes. The thermochromic system contains crystal violet lactone (dye), phenolphthalein (developer), and 1-tetradecanol (solvent) and offers a temperature regulation function thanks to 1-tetradecanol which act as a phase change material. The second objective of this study is to examine the performance characteristics of the microcapsules when applied to cotton fabric via the impregnation and exhaustion method. The visual photographs and colorimetric measurement results indicated that the fabrics treated with microcapsules exhibited thermochromic properties with both application methods. The performance of fabric (Fabric 2) treated with microcapsules by the exhaustion method was superior in terms of color change compared to fabric (Fabric 1) treated by the impregnation method. However, the T-history results demonstrated that the thermoregulation effect of Fabric 1 and Fabric 2 was comparable. The results of the air and water permeability tests on the fabrics indicated that both microcapsule application methods resulted in the pores of the fabrics being filled, thereby significantly reducing the permeability values. In addition, the bending rigidity of the fabrics increased with the addition of microcapsules to the fabrics, while the tear strength decreased. As a result, microcapsules can be effectively applied to cotton fabric by both methods. Moreover, the exhaustion method provided superior performance in relation to the affinity effect of the polymers forming the capsule wall structure against cotton cellulose molecules.