A two-stage process and apparatus for compacting tubular knitted fabrics, wherein at each stage the fabric, is acted upon by cooperating feeding and retarding rollers spaced apart a distance greater than the thickness of the fabric. Opposite fabric sides thus cannot be in simultaneous contact with the feeding and retarding rollers at the same point along the fabric. Fabric is transferred from a feed roller to a retarding roller while opposite sides of the fabric are closely confined in a compacting zone, free of contact with either roller. Fabric is longitudinally compacted during its traverse of that zone. In the second stage, the rollers are reversely oriented with respect the fabric. Unlike known two-stage procedures, not more than 60% of the compacting effort is imparted in either one of the stages. Preferably each stage imparts about 50% of the compacting effort. Higher production speeds and superior product quality are achieved.