The exponential increase in textile cotton wastes generation and the ineffective processing mechanism to mitigate its environmental impact by developing functional materials with unique properties for geotechnical applications, wastewater, packaging, and biomedical engineering have become emerging global concerns among researchers. A comprehensive study of a processed cotton fibres isolation technique and their applications are highlighted in this review. Surface modification of cotton wastes fibre increases the adsorption of dyes and heavy metals removal from wastewater. Cotton wastes fibres have demonstrated high adsorption capacity for the removal of recalcitrant pollutants in wastewater. Cotton wastes fibres have found remarkable application in slope amendments, reinforcement of expansive soils and building materials, and a proven source for isolation of cellulose nanocrystals (CNCs). Several research work on the use of cotton waste for functional application rather than disposal has been done. However, no review study has discussed the potentials of cotton wastes from source (Micro-Nano) to application. This review critically analyses novel isolation techniques of CNC from cotton wastes with an in-depth study of a parameter variation effect on their yield. Different pretreatment techniques and efficiency were discussed. From the analysis, chemical pretreatment is considered the most efficient extraction of CNCs from cotton wastes. The pretreatment strategies can suffer variation in process conditions, resulting in distortion in the extracted cellulose’s crystallinity. Acid hydrolysis using sulfuric acid is the most used extraction process for cotton wastes-based CNC. A combined pretreatment process, such as sonication and hydrolysis, increases the crystallinity of cotton-based CNCs. The improvement of the reinforced matrix interface of textile fibres is required for improved packaging and biomedical applications for the sustainability of cotton-based CNCs.