Sustainable water management is essential to guaranteeing access to safe water and addressing the challenges posed by climate change, urbanization, and population growth. In a typical household, greywater, which includes everything but toilet waste, constitutes 50–80% of daily wastewater generation and is characterized by low organic strength and high volume. This can be an issue for large urban wastewater treatment plants designed for high-strength operations. Segregation of greywater at the source for decentralized wastewater treatment is therefore necessary for its proper management using separate treatment strategies. Greywater reuse may thus lead to increased resilience and adaptability of local water systems, reduction in transport costs, and achievement of fit-for-purpose reuse. After covering greywater characteristics, we present an overview of existing and upcoming technologies for greywater treatment. Biological treatment technologies, such as nature-based technologies, biofilm technologies, and membrane bioreactors (MBR), conjugate with physicochemical treatment methods, such as membrane filtration, sorption and ion exchange technologies, and ultraviolet (UV) disinfection, may be able to produce treated water within the allowable parameters for reuse. We also provide a novel way to tackle challenges like the demographic variance of greywater quality, lack of a legal framework for greywater management, monitoring and control systems, and the consumer perspective on greywater reuse. Finally, benefits, such as the potential water and energy savings and sustainable future of greywater reuse in an urban context, are discussed.