Nanotechnology is a powerful tool for engineering functional materials that has the potential to transform textiles into high-performance, value-added products. In recent years, there has been considerable interest in the development of functional textiles using metal nanoparticles (MNPs). The incorporation of MNPs in textiles allows for the obtention of multifunctional properties, such as ultraviolet (UV) protection, self-cleaning, and electrical conductivity, as well as antimicrobial, antistatic, antiwrinkle, and flame retardant properties, without compromising the inherent characteristics of the textile. Environmental sustainability is also one of the main motivations in development and innovation in the textile industry. Thus, the synthesis of MNPs using ecofriendly sources, such as polysaccharides, is of high importance. The main functions of polysaccharides in these processes are the reduction and stabilization of MNPs, as well as the adhesion of MNPs onto fabrics. This review covers the major research attempts to obtain textiles with different functional properties using polysaccharides and MNPs. The main polysaccharides reported include chitosan, alginate, starch, cyclodextrins, and cellulose, with silver, zinc, copper, and titanium being the most explored MNPs. The potential applications of these functionalized textiles are also reported, and they include healthcare (wound dressing, drug release), protection (antimicrobial activity, UV protection, flame retardant), and environmental remediation (catalysts).