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                                                                    EXHIBIT 10.1
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                               JO-ANN STORES, INC.
                                 AS THE BORROWER


                            THE LENDERS NAMED HEREIN
                                   AS LENDERS


                       THE FIRST NATIONAL BANK OF CHICAGO
                             AS DOCUMENTATION AGENT

                                  COMERICA BANK
                               NATIONAL CITY BANK
                                  AS CO-AGENTS




                                 [KEYCORP LOGO]
                          KEYBANK NATIONAL ASSOCIATION,
            AS A LENDER, THE SWING LINE LENDER, THE ISSUING BANK AND
                             AS ADMINISTRATIVE AGENT



                       ----------------------------------

                                 AMENDMENT NO. 1
                                   DATED AS OF
                                DECEMBER 14, 1999
                                       TO
                                CREDIT AGREEMENT
                                   DATED AS OF
                                   MAY 5, 1999

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                       AMENDMENT NO. 1 TO CREDIT AGREEMENT

         THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of December 14, 1999
("THIS AMENDMENT"), among:

                  (i)   JO-ANN STORES, INC., an Ohio corporation (herein,
         together with its successors and assigns, the "Borrower");

                  (ii)  the Lenders party hereto (the "LENDERS"); and

                  (iii) KEYBANK NATIONAL ASSOCIATION, a national banking
         association, as a Lender, the Swing Line Lender, the Issuing Bank and
         as the Administrative Agent under the Credit Agreement:

         PRELIMINARY STATEMENTS:

         (1) The Borrower, the Lenders named therein, and the Administrative
Agent entered into the Credit Agreement, dated as of May 5, 1999 (the "CREDIT
AGREEMENT"). Capitalized terms used herein without definition shall have the
respective meanings ascribed thereto in the Credit Agreement.

         (2) The Borrower, the Lenders party hereto and the Administrative
Agent desire to amend certain of the provisions of the Credit Agreement, all as
more fully set forth below.

         NOW, THEREFORE, the parties hereby agree as follows:

         1. AMENDMENT TO CREDIT AGREEMENT. Section 9.10 of the Credit Agreement
is amended by adding the following at the end thereof:

         Notwithstanding the foregoing, the Borrower shall not be required to
         comply with the covenant contained in this section 9.10 with respect to
         the Testing Period ended on or nearest to October 31, 1999; otherwise,
         this covenant shall be fully applicable to all other Testing Periods
         referred to above in this section 9.10.

         2. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Administrative Agent and the Lenders as follows:

                  (a) AUTHORIZATION, VALIDITY AND BINDING EFFECT. This
         Amendment has been duly authorized by all necessary corporate action
         on the part of the Borrower, has been duly executed and delivered by a
         duly authorized officer or officers of the Borrower, and constitutes
         the valid and binding agreement of the Borrower, enforceable against
         the Borrower in accordance with its terms.

                  (b) REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. The
         representations and warranties of the Borrower contained in the Credit
         Agreement, as amended hereby, are true and correct on and as of the
         date hereof as though made on and as of the date hereof, except to the
         extent that such representations and warranties expressly relate to a
         specified date, in which case such representations and warranties are
         hereby reaffirmed as true and correct when made.

                  (c) NO EVENT OF DEFAULT, ETC. No condition or event has
         occurred or exists which constitutes or which, after notice or lapse
         of time or both, would constitute an Event of Default.


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                  (d) COMPLIANCE. The Borrower is in full compliance with all
         covenants and agreements contained in the Credit Agreement, as amended
         hereby.

         3. RATIFICATIONS. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Credit Agreement, and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Credit Agreement are ratified and
confirmed and shall continue in full force and effect.

         4. EFFECTIVENESS. The amendments to the Credit Agreement provided for
in this Amendment shall become effective on if and when, on a date (the
"EFFECTIVE DATE") on or prior to December 14, 1999, the following conditions
shall have been satisfied:

                  (a) this Amendment shall have been executed by the Borrower
         and the Administrative Agent and counterparts hereof as so executed
         shall have been delivered to the Administrative Agent;

                  (b) the Acknowledgment and Consent appended hereto shall have
         been executed by the Subsidiary Guarantors named therein, and
         counterparts thereof as so executed shall have been delivered to the
         Administrative Agent; and

                  (c) the Administrative Agent shall have been notified by the
         Required Lenders that such Lenders have executed this Amendment (which
         notification may be by facsimile or other written confirmation of such
         execution).

After this Amendment becomes effective as provided herein, the Administrative
Agent will promptly furnish a copy of this Amendment to each Lender and the
Borrower and confirm the specific Effective Date hereof.

         5. MISCELLANEOUS. (a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Amendment shall survive the
execution and delivery of this Amendment, and no investigation by the
Administrative Agent or any Lender or any subsequent Loan or other Credit Event
shall affect the representations and warranties or the right of the
Administrative Agent or any Lender to rely upon them.

         (b) REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and
all other agreements, instruments or documentation now or hereafter executed
and delivered pursuant to the terms of the Credit Agreement as amended hereby,
are hereby amended so that any reference therein to the Credit Agreement shall
mean a reference to the Credit Agreement as amended hereby.

         (c) EXPENSES. As provided in the Credit Agreement, but without
limiting any terms or provisions thereof, the Borrower agrees to pay on demand
all costs and expenses incurred by the Administrative Agent in connection with
the preparation, negotiation, and execution of this Amendment, including
without limitation the costs and fees of the Administrative Agent's special
legal counsel, regardless of whether the amendments to the Credit Agreement
contemplated by this Amendment become effective in accordance with the terms
hereof, and all costs and expenses incurred by the Administrative Agent or any
Lender in connection with the enforcement or preservation of any rights under
the Credit Agreement, as amended hereby.


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         (d) SEVERABILITY. Any term or provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.

         (e) APPLICABLE LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Ohio.

         (f) HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.

         (g) ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit Agreement.

         (h) COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same agreement.


               [The balance of this page is intentionally blank.]



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         IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
as of the date first above written.


JO-ANN STORES, INC.                         KEYBANK NATIONAL ASSOCIATION,
                                               INDIVIDUALLY AS A  LENDER, THE
                                               ISSUING BANK  AND THE
                                               ADMINISTRATIVE AGENT

BY: /s/ BRIAN P. CARNEY
   --------------------                     BY: /s/ TOM PURCELL
        EXECUTIVE VICE PRESIDENT                ---------------
            & CHIEF FINANCIAL OFFICER            VICE PRESIDENT

THE FIRST NATIONAL BANK OF CHICAGO,         NATIONAL CITY BANK,
     INDIVIDUALLY AS A LENDER AND                INDIVIDUALLY AS A LENDER AND
     AS DOCUMENTATION AGENT                      AS A CO-AGENT


BY: /s/ CATHERINE A. MUSZYNSKI              BY: /s/ JAN FOCKE
    --------------------------                  -------------
         VICE PRESIDENT                          VICE PRESIDENT

COMERICA BANK,                              FIRSTAR BANK, N. A.
     INDIVIDUALLY AS A LENDER AND
     AS A CO-AGENT
                                            BY: /s/ DAVID DANNEMILLER
                                                ----------------------
BY: /s/ JEFFREY JUDGE                            VICE PRESIDENT
    -----------------
     VICE PRESIDENT

FLEET NATIONAL BANK                         UNION BANK OF CALIFORNIA, N. A.

                                            BY: /s/ TIMOTHY STREB
BY:_______________________________              ------------------
          TITLE:                                VICE PRESIDENT

HARRIS TRUST AND SAVINGS BANK               MERCANTILE BANK NATIONAL ASSOCIATION

                                            BY: /s/ STEPHEN REESE
BY:_______________________________              ------------------
         TITLE:                                  VICE PRESIDENT

MELLON BANK, N. A.                          THE HUNTINGTON NATIONAL BANK


BY: /s/ RICH SCHAICH                        BY: /s/ LAURA CONWAY
   -----------------                            ----------------
    VICE PRESIDENT                               VICE PRESIDENT

FIFTH THIRD BANK, NORTHEASTERN OHIO


BY: /s/ ROY C. LANCTOT
   -------------------
    VICE PRESIDENT




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