Multifunctional composites and smart textiles are an important advancement in material science, offering a variety of capabilities that extend well beyond traditional structural functions. These advanced materials are poised to revolutionize applications across a wide range of industries, including aerospace, healthcare, military, and consumer electronics, by embedding functionalities such as structural health monitoring, signal transmission, power transfer, self-healing, and environmental sensing. This review, which draws on insights from various disciplines, including material science, engineering, and technology, explores the manufacturing techniques employed in creating multifunctional composites, focusing on modifying textiles to incorporate conductive fibers, sensors, and functional coatings. The various multifunctional capabilities that result from these modifications and manufacturing techniques are examined in detail, including structural health monitoring, power conduction, power transfer, wireless communication, power storage, energy harvesting, and data transfer. The outlook and potential for future developments are also surveyed, emphasizing the need for improved durability, scalability, and energy efficiency. Key challenges are identified, such as ensuring material compatibility, optimizing fabrication techniques, achieving reliable performance under diverse conditions, and modeling multifunctional systems. By addressing these challenges through ongoing research and further innovation, we can significantly enhance the performance and utility of systems, driving advancements in technology and improving quality of life.