Low liquor ratio (material to liquor ratio = 1:5) dyeing of cotton fabric with C.I. Reactive Blue 21 using dioctyl sodium sulfosuccinate as a surfactant was thoroughly analyzed. The dye–surfactant interactions in the micelles during low liquor ratio dyeing were investigated by ultraviolet-visible spectroscopy and the chemical mechanism of the process was evaluated by Fourier-transform infrared spectroscopy analysis. Cotton fabric was subjected to low liquor ratio dyeing and conventional dyeing by varying the temperature, pH, treatment time, and non-identical chemical concentration. The effectiveness of the process was assessed based on the color strength ( K/ S), exhaustion (%), fixation (%), and levelness. Low liquor ratio dyeing afforded superior dyeing compared to conventional dyeing, attributed to the anti-agglomeration effects of the former, which also had no adverse impact on the fastness of the dye. The lower environmental impact due to the lower effluent footprint (biological oxygen demand, chemical oxygen demand, total dissolved solids, and dissolved oxygen) is another benefit of low liquor ratio dyeing. High-pressure liquid chromatography and gas chromatography-mass spectrometry analyses revealed that the low liquor ratio dyed fabric is free of toxic substances (alkylphenol ethoxylates and formaldehyde). Moreover, low liquor ratio dyeing is more cost-effective and outperformed conventional dyeing in all aspects, while being a sustainable process.