In the field of textile and clothing, radio frequency identification (RFID), which is one of the most promising technological innovations, is used in manufacturing, inventory control, warehousing, distribution, logistics, automatic object tracking and supply chain management. Various retailers and manufacturers (of clothing as well as consumer goods) such as CVS, Tesco, Prada, Benetten, Wal-mart and Procter & Gamble, are now implementing the technology and exploring the impact of the technology on their business. RFID technologies may improve the potential benefits of supply chain management through reduction of inventory losses, increase of the efficiency and speed of processes and improvement of information accuracy. The basic of success lies in understanding the technology and other features to minimize the potential problems. Although the technology existed for several years, the technological challenges and cost issues are the major hurdles for the widespread use of RFID. In this paper, the authors have addressed the technology of RFID and various applications related to inventory management, production control, retail management, brand segregation etc. in textile and clothing industry. In addition, the disadvantages, challenges and future directions of RFID technology have also been highlighted.