Alginate fibers have great potential in many applications, such as medical dressings, surgical sutures, and masks, etc. owing to their good biocompatibility and other properties. However, for alginate fibers prepared by wet spinning, the fibers have disadvantages such as low strength, poor toughness, and brittleness. Herein, a simple, scalable, and cost-effective blending spinning strategy was developed to produce the alginate composite fibers with excellent mechanical properties. Cellulose nanocrystals (CNCs) were incorporated directly in the wet spinning solution to improve its strength, wherein the CNCs were prepared from waste cotton fabrics. Polyethylene glycol (PEG) molecular chain was grafted onto the CNC surface to be used as a plasticizer while increasing the dispersibility of CNCs in alginate matrix. It was worth noting that modification of alginate fibers with PEG grafted cellulose nanocrystals (CNC-g-PEG) enhanced the tensile strength and elongation at break, simultaneously. In addition, the CNC-g-PEG modified alginate fibers exhibited improved salt tolerance and reduced water absorbency. This work may make high-value utilization of waste cotton fabrics, and pave the way for the development of high-performance, green alginate fibers.