The textile industry is among the most environmentally damaging due to its intensive water, energy, and chemical usage, especially during the finishing stages. Traditional textile finishing processes rely on hazardous chemicals and energy-intensive methods, contributing to significant pollution, resource depletion, and health risks. This paper explores the critical sustainability issues in textile finishing, including water consumption, chemical pollution, and energy intensity, and highlights recent advancements in sustainable alternatives. Innovative technologies such as enzymatic treatments, nanotechnology, irradiation-based methods, and bio-based materials offer promising solutions for reducing environmental impacts while maintaining product quality. Techniques like bioscouring, enzymatic desizing, biobleaching, and advanced water-recycling systems such as zero-liquid discharge (ZLD) demonstrate practical and scalable approaches for a greener industry. The adoption of renewable energy sources and efficient machinery further supports sustainability goals. By integrating these advancements, the textile industry can mitigate its ecological footprint, align with regulatory demands, and meet growing consumer expectations for sustainable products.