As textile production continues to grow worldwide, managing the mounting waste generated by this industry is becoming an urgent environmental concern. Globally, over 92 million tons of textile waste are produced annually, much of which is incinerated or disposed of in landfills, contributing to greenhouse gas emissions, soil and water contamination, and ecosystem harm. This review explores how chemical and biotechnological methods, such as acid hydrolysis (achieving up to 70% glucose recovery) and enzymatic recycling (reducing energy consumption by approximately 20% compared to conventional methods), can transform textile waste into valuable resources, fostering a shift toward a circular economy that minimizes reliance on virgin materials. However, the diverse nature of textile waste-particularly in mixed fibers and materials treated with various finishes and additives-adds complexity to recycling processes, often necessitating specific pretreatment steps to ensure both efficiency and economic viability. Scalable solutions such as advanced solvent recovery systems, optimized pretreatment techniques, and fluidized-bed pyrolysis (which can increase bio-oil yields by up to 25% compared to fixed-bed reactors) play crucial roles in making textile recycling more sustainable and adaptable at an industrial scale. By addressing these technical and financial challenges, the industry can improve the efficiency and sustainability of textile recycling practices, reducing waste and contributing to environmental resilience. This review also suggests several future directions to enhance scalability and compatibility with environmental goals, highlighting the potential for these technologies to create valuable secondary materials and support greener practices in textile waste management. Through continued innovation and a commitment to sustainable practices, the textile industry can better balance resource recovery with economic feasibility, unlocking substantial opportunities to mitigate environmental impact and support a more resource-efficient, sustainable future.