Fabric is a mix of organic cotton and Tencel, which is said to drape well, be breathable, crease resistant, and biodegradable. See an excerpt from Wise Geek below :)
From Wise Geek: Tencel® is the registered trade name for a type of lyocell, a biodegradable material made from wood pulp cellulose. Fabric sold under the this brand specifically is manufactured by Lenzing AG. This material started to grow in popularity in the late 1990s and is now used in a variety of ways. Though the exact characteristics of the material depend on how it's processed, it tends to be durable and soft. Often said to be environmentally friendly, it is fully biodegradable and made from trees managed for sustained harvest.
Qualities This material is very versatile, since it can be manipulated to have a variety of textures. Early Tencel® garments were often compared to rayon in look and feel, but it is now made in a variety of textures including a silky, peach skin, or moleskin feel. Blends with other fibers such as wool, cotton or linen can produce a variety of textures. Garments made with this fabric generally drape well, resist wrinkles, and are fairly durable. Additionally, the fabric is very breathable and moisture wicking, which can make it good for those with sensitive skin.