Abstract: A baby blanket foldable to form a bunting and a bag including a soft cloth panel having a left edge a spaced opposite right edge. The cloth panel includes an upper, middle and lower section, which each extend from the left edge to the right edge. Left and right panels are pivotally connected to the left and right edges, respectively. The cloth panel is spread out with the left and right panels extending to form a large, soft baby blanket or changing cloth. The lower section is folded over and secured to the middle section along the edges to define a baby receiving and holding compartment. The left and right panels are then folded in toward each other over the lower section to form the bunting. Alternatively, the sections are folded to substantially overlie each other, and one of the panels is folded over several times to substantially overlie the other panel to form a compact bag.