Growing environmental concerns over synthetic, non-biodegradable materials have pushed the search for sustainable alternatives based on biodegradable materials. The objective of this paper is the valorisation of banana pseudostem waste as a source of reusable and biodegradable sponge for household use. The material selected for this study was banana fiber, extracted mechanically from the pseudostem of Musa species, which was chosen mainly due to its extraordinary strength, water absorption capacity, and the fact that it is a renewable resource. In order to promote swelling, raw fibers that had been mechanically smoothed using a pin beater, cut into small pieces and soaked overnight. Heat-treatment was conducted on a 20 g sample at 100 °C for 1 h, after which the sample was blended into wet pulp, oven-dried, and layered into a 12 g fiber web sandwiched between nonwoven fabrics. Absorbency of the finished sponge was determined in accordance with ISO 11948-1. Excellent water absorbency and retention were shown by the banana fiber sponge. The new development material is totally biodegradable, reusable, and does not contain any harmful chemicals, unlike conventional synthetic sponges and superabsorbent polymers (SAPs). The results present a great opportunity to use agricultural waste left after cultivation as raw materials for making high-quality, environmentally friendly cleaning products, in line with circular economy principles.