Minecraft wiki entry for Things_not_to_do, associated text: Sheep can only drop one block of wool when the player kills them. If the player has shears, they can right-click on a sheep with shears, yielding one to three blocks of wool. Also, if the player right-clicks a sheep with a dye in their hand, the color of the sheep changes to that color. If that same sheep is sheared then eats grass to re-grow their wool, it has the same color of wool as the player dyed it earlier. This makes wool of any color renewable. Baby sheep cannot be sheared and do not drop anything when killed.