Cellulose nanofibers (CNs) are isolated from cotton wool using subcritical water in a semiflow hydrothermal reactor to achieve green hydrolysis. The yield and crystallinity index (CI) of nanocellulose is optimized via varying temperatures and hydrolysis time while maintaining the pressure at 10 MPa. Under the subcritical condition, water dissociates into H3O+ and OH−, allowing protonation of the β-glycosidic bond to hydrolyze cellulose strands into short chain fibers. Hydrolysis rates enhance with increasing temperatures, further disintegrating cellulose into smaller nanofibrils. At 180 °C, amorphous cellulose dissolution occurs, increasing the crystallinity without disintegrating the crystalline fibrous network. The concentration of H3O+ increases at 230 °C, further hydrolyzes cotton wool into uniform nanofibril cellulose with 14.3 ± 1.2 nm diameter. The tensile strength and elongation at break enhance using cellulose nanofibers obtained at 220 and 230 °C due to the small nanocellulose sizes that allow efficient dispersion in the poly(vinyl alcohol) (PVA) matrix.