Coloured cotton has gained significant attention as an eco-friendly alternative to conventionally dyed cotton, offering a sustainable approach to textile production. This review explores recent advances and future prospects in the breeding of naturally coloured cotton, highlighting its role in promoting sustainability within the environment intensive textile industry with the specific objective of identifying genetic and biotechnological strategies that can overcome current agronomic and commercial limitations. Traditional and modern breeding techniques have been employed to enhance fibre quality, yield, and colour stability, accelerating the development of cultivars with improved agronomic traits and diverse pigmentation. Compared to conventional cotton, coloured cotton reduces water usage by up to 90% and eliminates the need for synthetic dyes, decreasing chemical pollution by approximately 85%. Despite these benefits, challenges such as limited fibre quality, lower yield potential, and market acceptance hinder its large-scale adoption. Future breeding strategies should prioritise overcoming these constraints by leveraging biotechnology, tapping into genetic diversity, and enhancing climate resilience. Advancing research in fibre enhancement, pigment stabilisation, and commercial viability will be crucial in establishing coloured cotton as a mainstream sustainable textile resource.