The production of eco-friendly and biodegradable fibre-reinforced composite materials has become the subject of extensive research with a view to managing the growing environmental concerns worldwide. In light of this, this review aims to raise awareness regarding the utilization of natural fibres in composite materials, which have been shown to reduce greenhouse gas emissions and carbon footprint significantly. However, despite the numerous benefits of natural fibres, several challenges must be addressed, such as poor compatibility, undesirable interfacial adhesion between natural fibres and matrix, low impact strength, and poor fire resistance. This article briefly assesses the need to meet the demand for eco-friendly materials through prominent modification and processing methods and investigates their properties and applications. Additionally, this article also analyzes the impact of hybridization through a comprehensive comparative analysis. The purpose of this article is to provide a better understanding of the role of natural fibres in reinforcing composites and to emphasize the importance of finding innovative solutions to overcome the challenges associated with their use. In conclusion, this review highlights the potential benefits of using natural fibres in composite materials and emphasizes the need for further research to address the challenges associated with their utilization. This would ultimately lead to the development of sustainable materials that contribute significantly towards reducing the environmental impact of manufacturing processes.