The textile and garment manufacturing process in the textile industry produces a significant amount of waste, including fabric scraps, dyes, chemicals, as well as leftover fibers and yarns, leading to environmental pollution. The issue of fabric and garment waste is a major concern within the industry. This review provides an overview of the prevailing waste challenges in the textile sector while exploring the basics of the circular economy. In addition, the current life cycle and a comprehensive system map are used to visualize the entire life cycle, with a particular focus on waste management and its environmental and social impacts. In alignment with circular economy principles, an alternative circular product proposal is presented. A second map illustrates the new proposition, highlighting its projected life cycle and points of impact. The review incorporates additional findings and relevant research related to these proposals, aiming to promote sustainable solutions for waste reduction in the textile industry.