Transglutaminase (TGase) catalyzes the cross-linking of many proteins and has been widely used to improve the properties of certain protein-based materials. Keratin is considered as a promising biomaterial candidate following traditional chemical modification. In this study, the effect of TGase on the properties of a wool keratin film was investigated. The TGase-modified film was applied to drug release and cell proliferation. Treatment with TGase (30 U/g keratin) for 18 h at 40°C increased the tensile strength of the film from 5.18 ± 0.15 MPa to 6.22 ± 0.11 MPa and decreased the elongation at break from 83.47 ± 1.79% to 72.12 ± 3.02%. The stability of the film in PBS and in artificial gastric juice was also improved. A rougher surface and a more compact cross-section were observed by scanning electron microscopy photographs of the TGase-treated film. SDS-PAGE analysis confirmed that higher molecular weight proteins were formed in the TGase-modified keratin solution and film. The results of the drug release assay using diclofenac indicated that both films with and without TGase treatment led to a high initial release in PBS, which was more constant in artificial gastric juice. The enzyme treatment led to a lower drug release rate from the film. Cell culture experiments suggested that the TGase-mediated cross-linked keratin film shows a good biocompatibility and that it can be used for tissue engineering applications.