Cotton bleaching is traditionally carried out in strongly alkaline solution of hydrogen peroxide (H2O2) at temperatures close to the boil. Such harsh processing conditions can result in extensive water and energy consumptions as well as severe chemical damage to textiles. In this study, an activated peroxide system was established for low-temperature cotton bleaching by incorporating a bleach activator, namely N-[4-(triethylammoniomethyl)benzoyl]butyrolactam chloride (TBBC) into an aqueous H2O2 solution. Experimental results showed that the TBBC-activated peroxide system exhibited the most effective bleaching performance in a pH range of 6–8 which could be approximated by adding sodium bicarbonate (NaHCO3). The TBBC/H2O2/NaHCO3 system led to rapid bleaching of cotton at a temperature as low as 50°C. In comparison with the hot alkaline peroxide bleaching system, the TBBC/H2O2/NaHCO3 system provided cotton fabric with an equivalent degree of whiteness, higher degree of polymerization, and slightly lower water absorbency. The new activated peroxide system may provide a more environmentally benign approach to cotton bleaching.