The textile sector generates a significant volume of waste, with the majority being included in municipal solid waste. Innovative management is crucial for improving sustainability in this sector. The biodegradation of Rhodamine B dye via vermicomposting methods is a novel concept. This study investigated the biodegradation capability of the epigeic earthworm species Eudrilus eugeniae in various combinations of dye, rice husk (RH), and cow dung (CD) relative to composting. The pH, electrical conductivity, and organic carbon availability substantially reduced following vermicomposting in comparison with aerobic composting. The dynamics of Ca-K availability stabilized effectively due to vermicomposting. In the experiment, Eudrilus eugeniae showed significant adaptation to the toxic dye. The metal accumulation capacity was notable, resulting in a 50–90% reduction of Cd, Cr, Zn, Mn, Co, and Pb concentrations in the vermicomposting system. The earthworm species similarly enhanced the proliferation of beneficial microorganisms, specifically nitrogen-fixing and sulfate-reducing types, within the unit. The degradation of dye was primarily examined using HPLC, revealing that vermicomposting achieved a 76–98% degradation of Rhodamine B. This study shows that the biodegradation of Rhodamine B via vermicomposting is the most simple and cost-effective method for dye degradation, contributing to textile waste management.