The fashion industry is widely recognized as one of the most environmentally harmful industries, prompting increasing attention to technological and circular solutions promoted as pathways toward sustainability. This review paper critically examines whether these approaches can deliver meaningful sustainability outcomes by focusing on the trade-offs they entail. Using a critical narrative review of the interdisciplinary literature, the paper analyzes three illustrative cases: recycled polyester as a material innovation, secondhand clothing as a circular economy business model, and garment rental services as an access-based consumption model. The analysis evaluates environmental, economic, social, and technical trade-offs, including life-cycle impacts, technological constraints, consumer behavior, rebound effects, scalability, and systemic implications. The findings indicate that each solution addresses specific environmental challenges while simultaneously creating new limitations. Recycled polyester can reduce demand for virgin raw materials but remains constrained by technical limitations, reliance on plastic waste streams, uncertain environmental performance, and ongoing microplastic pollution. Secondhand clothing can extend product lifetimes, yet its environmental benefits depend on replacing new purchases and may be undermined by rebound effects, overconsumption, and market distortions. Garment rental services can increase product utilization but generate additional impacts through transportation, cleaning, logistics, and barriers to consumer acceptance. The review argues that evaluating individual products or business models in isolation risks overlooking the broader production and consumption dynamics that drive the industry’s environmental impacts. Sustainable fashion should therefore be understood as a systemic challenge rather than the outcome of individual innovations.