β-Cyclodextrin (β-CD) is an oligosaccharide composed of seven units of D-(+)-glucopyranose joined by α-1,4 bonds, which is obtained from starch. Its singular trunk conical shape organization, with a well-defined cavity, provides an adequate environment for several types of molecules to be included. Complexation changes the properties of the guest molecules and can increase their stability and bioavailability, protecting against degradation, and reducing their volatility. Thanks to its versatility, biocompatibility, and biodegradability, β-CD is widespread in many research and industrial applications. In this review, we summarize the role of β-CD and its derivatives in the textile industry. First, we present some general physicochemical characteristics, followed by its application in the areas of dyeing, finishing, and wastewater treatment. The review covers the role of β-CD as an auxiliary agent in dyeing, and as a matrix for dye adsorption until chemical modifications are applied as a finishing agent. Finally, new perspectives about its use in textiles, such as in smart materials for microbial control, are presented.