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Wastewater generated from households can be classified into greywater and blackwater. Greywater makes up a substantial portion of household wastewater. Such water consists of wastewater released from kitchen sinks, showers, laundries, and hand basins. Since the greywater is not mixed with human excreta and due to the low levels of pathogenic contamination and nitrogen, it has received more attention for recycling and reusing in recent decades. Implementing decentralized greywater treatment systems can be an effective solution to overcome water scarcity by supplying a part of water requirement, at least non-potable demand, and decreasing pollutant emissions by eliminating long-distance water transportation in remote regions, like rural and isolated areas. This review focuses on greywater management in terms of reducing environmental risks as well as the possibility of treatment. Effective management of water reclamation systems is essential for a decentralized approach and to ensure the protection of public health. In this regard, the environmental impacts of disposal or reusing the untreated greywater are discussed. Furthermore, the most appropriate technologies that can be employed for the decentralized treatment of greywaters like constructed wetlands, waste stabilization ponds, membrane systems, and electrochemical technologies are described. Finally, this review summarizes resource recovery and sustainable resource reuse.