The textile industry is one of the most intensive industries in chemical products whose wastewater contains hazardous dyes, pigments, dissolved/suspended solids, and heavy metals. Hence, it is important to effectively treat the wastewater generated by this industry before releasing it into the environment. Though the field of textile wastewater treatment has made tremendous progress, the developed treatment methods should be improved further to make them economically viable and friendly. In this review, characteristics of textile wastewater are introduced. We have primarily focused on the environmental impact and toxicity of textile wastewater. Toxic and harmful contaminants must be removed from textile wastewater to reduce the extent of environmental pollution caused when textile wastewater is released into rivers or reused. Hence, various techniques that are used to treat textile wastewater are discussed. Finally, the challenges faced, and prospects of the methods have been discussed in detail.