Innovation in plastic waste recycling technologies is essential for tackling the environmental challenges of plastic pollution. Traditional plastic waste management strategies, such as landfill disposal and mechanical recycling, are increasingly recognized as insufficient for addressing the problem’s complexity and scale. This review highlights advanced methods that transform plastic waste into valuable resources, aligning with circular economy principles. I focus on cutting-edge technologies such as chemical recycling that convert mixed and contaminated plastics back into monomers for new production. Biological approaches utilizing enzymes and microorganisms are studied for their potential to biodegrade resistant plastics like PET. Additionally, mechanical innovations like advanced sorting techniques leveraging AI and compatibilization strategies that enhance the quality of recycled materials are discussed. By analyzing recent developments and practical applications, effective and economically viable solutions are identified. These findings emphasize that ongoing technological advancements, supported by robust policies and stakeholder collaboration, are crucial for reducing plastic waste and advancing toward a sustainable circular economy.