There is a growing demand for the adoption of cyclical processes in the fashion industry. The trends point to the reuse of cellulose from cotton fibres, obtained from industrial waste, as a substitute to the former linear processes of manufacturing, sale, use, and discarding. This study sets up to explore and assess the economic and environmental gains from the mechanical shredding of cellulose in cotton fabrics in a textile company, identifying the circularity associated with the adoption of such methods. The study resorted to a case study methodology building on interviews and observation. For the environmental estimations, the study employed the material intensity factor tool, and for the economic evaluation the study uses the return on investment. The study also offers an estimation of the circularity of the processes that were implemented. The adoption of the mechanical shredding for cotton cellulose generated economic gains of US$11,798,662.98 and a reduction in the environmental impact that amounts to 31,335,767,040.26 kg including the following different compartments: biotic, abiotic, water, air, and erosion. The findings suggest the existence of opportunities for the circular economy in the textile sector of about 99.69%, dissociated to the use of mechanical recycling, while limited by the consumption of electrical energy and lubricants in the recycling process, leading the way to a circular economy.