The leather and footwear industry play a central role in Albania’s economy, contributing significantly to employment and exports. However, the reliance on leather as a primary raw material generates substantial waste, with 20–30% of the material lost as offcuts and residues during production. These wastes, often chrome-tanned, pose serious environmental risks due to their complex chemical composition, slow biodegradability, and potential contamination of soil and water. At present, most residues are disposed of in landfills or incinerated, practices that undermine sustainability and circular economy goals. This paper explores recycling pathways for leather waste within the Albanian footwear sector, emphasizing the application of Resource Efficiency and Cleaner Production (RECP) principles. Three recycling approaches mechanical, chemical, and hybrid are analyzed with regard to their processes, outputs, and potential to transform waste into value-added materials. Mechanical recycling provides fillers, composites, and molded products; chemical recycling enables collagen recovery through enzymatic hydrolysis and alkaline treatments; and hybrid recycling combines leather fibers with natural plant fibers to produce bio-based composites. By comparing technological opportunities with environmental and economic challenges, the study highlights recycling as a key strategy to waste disposal impacts, create new value chains, and align the Albanian footwear sector with United Nations Sustainable Development Goals (SDGs). The findings underscore the importance of integrating innovative recycling methods, policy support, and industry collaboration to advance a more sustainable and circular leather and footwear industry in Albania.