Abstract: A hand towel dispenser of the type that unrolls clean towel from a roll in metered portions, dispenses the clean towel in the form of a towel loop, and rolls used towel portions on a takeup roll utilizes a used towel portion to form a length of the towel loop, thus conserving clean towel dispensation and use. An oscillating roller forms an additional loop of used towel within the dispenser. The roller tracks within the dispenser to allow the formed additional towel loop to be formed into a part of the main towel loop.