The leather industry and its affiliated sectors encompassing numerous tanneries are contributing substantially to Pakistan’s economy. These are predominantly found in three major urban centers of Pakistan: Kasur, Karachi, and Sialkot. In recent years, the leather manufacturing sector has come under scrutiny for issues related to animal welfare, environmental consequences, and labor conditions in certain regions. Nevertheless, initiatives are underway to tackle these challenges by enhancing sustainability measures and promoting greater transparency within the supply chain. In this chapter, leather supply chain is analyzed, revealing its complexity and the sustainability challenges it faces, including air and water pollution, waste generation, and reliance on harmful chemicals. This chapter emphasizes the importance of achieving a balance between social, economic, and environmental factors for a sustainable leather industry. Innovations such as bio-based tanning agents, microbial tanning, enzyme based tanning, ultrasound tanning, nanotechnology, masked silica tanning, compact glyoxal tanning and circular economy strategies, including zero liquid discharge systems, aim to minimize the leather industry impact on the environment. Noteworthy case studies show promising advancements in waste management and resource efficiency. However, barriers such as high initial costs, lack of skilled labor, and regulatory complexities hinder technology adoption. A collaborative effort involving governments, industries, and financial institutions is vital for overcoming these challenges, ensuring the leather industry progresses towards sustainability while meeting global demands for leather products.