Pakistan’s textile industry plays a crucial role in the national economy, accounting for 8.5% of GDP and over 60% of export revenues. Amongst the prominent employment sectors, it forms the backbone of the country’s manufacturing base. However, despite its economic importance, the industry poses significant environmental challenges. This chapter explores the environmental performance of Pakistan’s textile sector, focusing on key issues such as energy and water consumption, wastewater discharge, GHG emissions, and solid waste generation. Wet processing, in particular, consumes vast quantities of water and chemicals, contributing to serious water pollution and high energy use. Wastewater often contains hazardous substances, including dyes, POPs, and heavy metals, threatening aquatic and terrestrial ecosystems. Furthermore, energy-intensive practices in spinning, weaving, and dyeing significantly contribute to greenhouse gas emissions. The study also examines sustainable alternatives, including foam dyeing, micelle technology, water reuse strategies, and recycling practices, which offer potential for reducing the sector’s environmental footprint. Additionally, the role of eco-labels and certifications in improving environmental compliance and sustainability practices is discussed. The research underscores the urgency of integrated policy frameworks, industry collaboration, and technological innovation to improve environmental performance. Emphasizing eco-efficiency, resource recycling, and sustainable raw material use, the study advocates for a systemic transition towards a circular and greener textile economy. These insights are essential for stakeholders aiming to balance economic growth with environmental stewardship in Pakistan’s textile industry.