Despite the growing social trend of sustainability in the textile and modern industry of the European Union, Europeans state that they consume an average of 26 kg of textiles per person per year. It is stated that each item is used for a short time, resulting in the rejection of 11 kg of textiles per person per year. Both in Europe and around the world, there is an urgent need to reduce the amount of waste generated by the global fashion industry - estimated at 92 million tonnes a year. Numerous initiatives are being taken in Europe to address the sustainability of the fashion industry. And the textile industry is defined as a priority sector in which the EU can open the way for a carbon - neutral, circular economy. These key challenges could be addressed by making cellulose fibers from materials derived from textile waste. These fibers are biodegradable and are therefore considered more environmentally sustainable than synthetic fibers. Also, textiles and clothing made from these fibers can be used as raw materials in recycling processes at the end of their lives, thus contributing to the development of the circular economy. New approaches to textile waste recycling are constantly evolving. Textile waste in the form of cotton fabrics proves to be a sustainable source of cellulose for paper production or as a material for adsorption of toxic compounds. The aim of this paper is to clarify the role of textile waste in the circular economy as a raw material in the paper and packaging industry.