Millions of tons of textile waste are landfilled or incinerated in the world every year due to insufficient recycle value streams and the complex composition of textile end products. The goal of this review is to highlight pathways for simplifying and separating textile wastes into valuable raw material streams that will promote their recovery and conversion to useful products. The discussion focuses on advances in sorting, separation, decolorization and conversion of polyester and cotton, the two most common textile fibers. Sorting processes are gaining automation using spectroscopic methods that detect chemical composition differences between materials to divide them into categories. Separation, through dissolving or degrading, makes it possible to deconstruct blended textiles and purify polymers, monomers and co-products. Waste cotton can produce high quality regenerated cellulose fibers, cellulose nanocrystals (CNCs) or biofuels. Waste polyester can produce colored yarns or can be chemically converted to its starting monomers for the recreation of virgin polymer as a complete closed loop. The current strategies for decolorization are presented. Life cycle assessment (LCA) studies found that recycling polyester/cotton blended fabrics for subsequent uses is more sustainable than incineration, and research on producing biomass-based poly-ester also offers feasible avenues for improving textile sustainability and promoting circular processing.