In this study, recycling of solid textile wastes into activated carbon and the potential use of these activated carbons in color removal were investigated. Cotton and cotton/polyester-blended fabric wastes and textile wastewater treatment sludge were selected as solid textile wastes. A two-stage method, low temperature carbonization, and chemical activation with ZnCl2 were applied to prepare large surface area and rich-pore structure activated carbon from fabric wastes and sludge in textile industry. The activated carbons were characterized by elemental analysis, Fourier-transform infrared spectroscopy, X-ray fluorescent, and Brunauer–Emmett–Teller analysis. The reactive dye (Reactive Red 141) adsorption capacity of the activated carbons was investigated by the batch adsorption method. Activated carbon yields were found in the range of 28–34%. Cotton textile waste-based activated carbons were found to have the highest surface area (~1380 m2/g), followed by cotton/polyester and wastewater treatment sludge-based activated carbons. Wastewater treatment sludge-based activated carbons showed the highest dye adsorption capacity (161.29 mg/g), possibly due to its higher mesoporosity. The obtained results showed that the adsorption of the reactive dye onto textile waste-based activated carbons produced by two-step process is favorable. The developed activated carbons fit the circular economy approach well, offering a promising potential for solid textile waste management, as well as for water remediation.