The global shift towards sustainability has driven the exploration of renewable materials to replace non-biodegradable substances. Carboxymethylcellulose (CMC), a versatile cellulose derivative, has emerged as a key biopolymer due to its water solubility, biodegradability, and functional properties, enabling applications across food systems, packaging, textiles, pharmaceuticals, and environmental remediation. This review highlights the potential of upcycling agricultural and industrial waste into CMC, promoting resource efficiency and advancing the circular economy. Bioconversion of waste materials into CMC leverages biological, chemical, and thermal methods, transforming cellulose-rich byproducts into high-value materials while addressing waste management challenges. Agricultural residues such as corn husks, sugarcane bagasse, and cotton waste serve as renewable feedstocks, offering cost-effective and sustainable pathways for CMC production. Wastepaper also presents an opportunity for upcycling, with advanced recycling processes yielding high-quality cellulose for diverse applications. CMC’s versatility enables numerous sustainable applications. In food systems, it enhances texture, stability, and shelf life, supporting the development of eco-friendly packaging and healthier formulations. Its biocompatibility allows advanced biomedical applications, including drug delivery and wound healing. Furthermore, CMC is instrumental in environmental remediation, facilitating pollutant removal and wastewater treatment. This review emphasizes the transformative potential of CMC, derived from upcycled waste, to foster sustainable innovation and reduce environmental impact across industries.