Abstract: A decorative towel kit and a method of using the same. The kid includes a towel folded to form a front portion and a rear portion which are adjacent each other and generally aligned along a longitudinal axis of the towel; a sleeve removably engageable about an exterior surface of the folded towel such that the sleeve is disposed generally at right angles to the longitudinal axis; and a decal provided on the sleeve. The sleeve is wrapped around the towel when folded. The decal includes a decorative image and is removably engaged with the sleeve. The kit may include one or more towels, one or more sleeves, and one or more decals that may be used in a variety of combinations with each other.