<p>The environmental pollution and health hazards caused by the textile industry, due to conventional denim washing emitting toxic effluent, high water consumption, and energy use, demand urgent intervention and sustainable alternatives. Water bodies are contaminated with harmful substances like chlorine, KMnO₄, and sulfur-based reducing agents released by conventional washing methods. Severe occupational health risks call for eco-friendly alternatives. Eco-conscious consumers increasingly require sustainable, washed apparel. This is a systematic review that critically evaluates fruit peel extracts, particularly citrus peels, as sustainable reducing agents to replace synthetic chemicals in denim processing. Ascorbic acid, citric acid, and flavonoids are some of the major bioactive compounds extracted from persimmon, banana, and citrus peels that achieved satisfactory color fastness and significantly reduced COD, toxic emissions, and chemical pollution in effluents with indigo reduction with redox potentials of − 550 to − 700 mV, comparable to sodium dithionite. However, several critical barriers persist before industrial adoption can take place: natural variability in peel composition results in inconsistent quality and, therefore, the performance of extracts; the cost of extraction is higher compared to established synthetic agents; and scalability is constrained by (a) a fragmented supply chain, (b) seasonal availability, and (c) a lack of standardized protocols. While lab-scale studies confirm technical feasibility, this review concludes that industrial implementation calls for comprehensive life cycle assessments, pilot-scale validation, and standardized extraction methods using UAE and MAE integrated with circular economy models, including waste valorization for biogas or biochar production.</p>