Every year, a massive volume of textile waste is disposed of in a landfill or incinerated, contributing to resource loss and environmental consequences. Researchers are using textile waste to simultaneously develop composite materials to address both issues. Although manufacturing composites temporarily solves the problem, these composites will eventually wind up in landfills at the end of their service life unless appropriate manufacturing and recycling methods are followed. This review assessed the feasibility, benefits, drawbacks, and limitations of various composites manufactured from textile waste and their recycling procedures in terms of having minimal or no environmental impact after their end-of-life. This paper discusses two alternative composite manufacturing technologies and various recycling processes. Based on the review, developing biocomposites from textile waste comprised of natural components is one of the most promising options regarding sustainability and environmental friendliness. Moreover, by adopting this method, some partially biodegradable composites can be transformed into fully biodegradable materials, resulting in various benefits, including improved mechanical properties. Then, as one of the potential solutions, ionic liquids are discussed. Ionic liquids can dissolve a wide range of fibers. Most crucially, ionic liquids can dissolve a specific fiber from a blend of fibers, which is traditionally considered the main difficulty with textile waste. Furthermore, for some fully non-biodegradable and partially biodegradable composites, several recycling strategies have been discussed and, in part, used by numerous companies to recover waste fibers and keep them out of landfills. The advantages, downsides, and limitations of each recycling process have also been explored. Finally, applications and future perspectives for these manufacturing and recycling processes are emphasized.