Kill the fungus. “A sour-smelling towel is difficult but not impossible to remedy.” The problem is usually mildew, which is a fungus. To defeat the mildew, soak your towels in hot water, with a few tablespoons of all-fabric bleach per quart of water. If your towels are white, try using chlorine bleach instead, because its disinfecting properties are more powerful.
Add some sun. Did we mention you should undertake this task on a sunny day? Once you’ve laundered the towels in hot water and dried them “most of the way” in a tumble dryer set on high, you should hang them on a line in the sun. “The sun’s rays are natural disinfectants, and the fresh air will go a long way toward ensuring sweet-smelling towels.”
Don’t be stubborn. If a towel still smells after you’ve taken these steps, “it may simply be time to get rid of it.”
Source: Martha Stewart Living