With increasing concerns over environmental sustainability in recent decades, the use of natural fibers has gained traction as a means to reduce the usage of synthetic fibers, even though natural fibers cannot completely replace synthetic fibers. This chapter explores the significance and diverse applications of banana fibers in modern textiles, underscoring their relevance in today’s world as a sustainable and eco-friendly alternative. Banana fibers are obtained from the pseudo-stem and peduncle of the banana tree. These locally sourced bast fibers possess good qualities like low density, tensile strength, disposability, and renewability, and they are hygroscopic. The transformation of banana fiber from raw material to finished fabric is a focal point of this study, offering insights into the detailed processes, methods, and technologies used in the production of banana fiber textiles. Also, the advanced textile manufacturing techniques that integrate these fibers into high-quality fabrics are discussed. Comparative studies are presented, analyzing the mechanical and thermal properties, environmental impact, and economic benefits of banana fiber in contrast to other cellulose fibers. This chapter also provides an overview of current research on biomedical applications, examining the potential benefits of using banana fibers in medical textiles. Secondary focus is given to functional and decorative textiles. Despite these advantages, banana fibers also face challenges that limit their broader industrial applications, most notably their low interfacial bonding strength in composite materials and their natural tendency to absorb moisture. These factors affect their performance in various applications. This chapter also addresses these limitations, exploring techniques such as fiber doping and surface modification that enhance the quality and versatility of banana fiber textiles. Further, it focuses on assessing the sustainability of banana fabric, economic benefits, business potential, with emphasis on adapting to a zero-waste lifestyle.