The finite material basis for human activities on Earth is under growing pressure. The unsustainable outcomes of the textile sector include resource overuse, accumulation of waste, largely uncontrolled emission release into the natural system and labour rights violations. There is broad consensus in academia and the industry itself regarding need to transform the textile system. Circular economy (CE) has recently been the most prominent strategy to target resource scarcity and environmental problems at the same time. CE is at the core of the Textiles Strategy within the EU's Green Deal Circular Economy Action Plan. It focusses on energy efficiency, reusability, recyclability and repairability of textile products. Despite its popularity and increasing implementation in the textile sector, CE is criticised as perpetuating the unsustainable status quo by fuelling the narrative of ecological modernisation. This research therefore investigates the contribution of CE reuse and recycling interventions to reduced material flows and overall sustainability in the textile sector from a comprehensive sustainability perspective by using systems thinking. In a first step, the systems-oriented concept map extension tool is used to explore and illustrate sustainability challenges in the multiscalar and deeply interconnected textile system. In a second step, recycling and reuse are critically assessed in terms of their potential contribution to (1) limited overall material throughput and (2) environmental, social and economic sustainability in the case of textiles. Our findings show that recycling and reuse as CE interventions are suited only to a limited extent to achieve the goal of reduced material flows if operating within traditional market dynamics and growth paradigms. Therefore, CE's most prominent interventions in the textile sector are not able, per se, to lead to a more sustainable textile sector. We offer four recommendations for practitioners, policy makers and scholars to redirect CE towards sustainability and invite for discussion: (1) reintroduce waste hierarchies with a clear prioritisation on overall reduction of all sources and forms of waste, (2) reduce material and products' complexity, (3) reframe a CE narrative for the textile sector and (4) apply a systems perspective to CE.