This chapter examines the relationship between innovation, sustainability, and circularity in the European fashion industry. It introduces theoretical models that link innovation ecosystems to sustainable transitions, including the role of circular innovation metrics, regenerative business models, and industrial symbiosis. The chapter analyses structural challenges in the fashion sector, such as overproduction, environmental pressure, and resource-intensive value chains, highlighting the need for systemic approaches that integrate circular models, bio-based materials, sharing platforms, and closed-loop systems. It also provides a conceptual discussion of fashion as a socio-technical system embedded in cultural, territorial and productive dynamics. By linking ecosystem theories with practical models of circularity, the chapter offers an interdisciplinary framework for interpreting how companies and districts can accelerate sustainable transformation through innovation.