Abstract: A functional yarn includes a thread, a plastic material coated on the thread and functional particles disposed evenly in the plastic material. A method for manufacturing a functional yarn includes the steps of blending a plastic material with function particles so that the functional particles are disposed evenly in the plastic material and coating the plastic material with functional particles on a thread in a hot-melt manner to form the functional yarn. Because the functional yarn uses the plastic material as a binding agent, the functional particles are adhered firmly on the thread.