Embracing a circular economy in the textile industry represents a crucial step toward sustainability, where fashion and textile sectors contribute significantly to CO emissions. However, transitioning from a linear "take-make-waste" model to circularity, poses multifaceted challenges, that highlight the staggering volume of annual textile waste surpassing industry predictions, thus emphasizing the urgent need for comprehensive strategies. Despite advancements in recycling technologies, challenges persist in collecting and sorting textile waste, where fragmentation in waste management and recycling processes hinders effective management of post-consumer waste. Addressing these challenges demands elevated efforts in collection, sorting, and pre-processing, alongside regulatory interventions to drive enhanced waste collection and circular business models. Efforts are underway to promote sustainable textile recycling, with initiatives like the EU's Sustainable and Circular Textiles Strategy aiming to reduce reliance on virgin resources. However, achieving a circular textile market in the near future requires collaborative action and innovative solutions. Though challenges in scaling and technological limitations still remain, recent breakthroughs in textile-recycling technologies offer promise, signaling a shift toward scalable and sustainable alternatives to virgin fibers, where bio-based chemical processes, and thermochemical recycling processes present transformative opportunities. Where, bold scaling targets, collaborative efforts, and short-term funding support narrated in this perspective article are imperative to accelerate the transition to a circular textile economy, thus delving into the pivotal role of textile recycling, tracing the evolution of recycling technologies, and addressing critical challenges hindering widespread adoption.