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The growing textile industry is polluting the environment and producing waste at an alarming rate. The wasteful consumption of fast fashion has made the problem worse. The waste management of textiles has been ineffective. Spurred by the urgency of reducing the environmental footprint of textiles, this review examines advances and challenges to separate important textile constituents such as cotton (which is mostly cellulose), polyester (polyethylene terephthalate), and elastane, also known as spandex (polyurethane), from blended textiles. Once separated, the individual fiber types can meet the demand for sustainable strategies in textile recycling. The concepts of mechanical, chemical, and biological recycling of textiles are introduced first. Blended or mixed textiles pose challenges for mechanical recycling which cannot separate fibers from the blend. However, the separation of fiber blends can be achieved by molecular recycling, i.e., selectively dissolving or depolymerizing specific polymers in the blend. Specifically, the separation of cotton and polyester through dissolution, acidic hydrolysis, acid-catalyzed hydrothermal treatment, and enzymatic hydrolysis is discussed here, followed by the separation of elastane from other fibers by selective degradation or dissolution of elastane. The information synthesized and analyzed in this review can assist stakeholders in the textile and waste management sectors in mapping out strategies for achieving sustainable practices and promoting the shift towards a circular economy.