Traceability has gained considerable attention to facilitate monitored production, product recall, safety and reverse supply chain activities, in recent years. Traceability in manufacturing and distribution involves the use of tracking tags which are attached to the products; consequently, the products are tracked by recording the identity of attached tracking tags in the supply chain. In this context, this paper introduces a new yarn coding-based tracking tag which is fully integrated into textile for tracking the textile supply chain. The new tracking tag involves the use of special yarns which act as information carrier and basic unit of the tracking tag. An implementation scenario is discussed to use the designed tracking tag to monitor the production and authentication purposes. Real prototypes of the fully integrated coded yarn based textile tags are demonstrated in woven and knitted structures and analysed under the effect of washing treatments to simulate realistic conditions. Further, an image pattern recognition based algorithm has been introduced and analysed to extract the information encoded in the tag using coded yarns.