Aromatherapy, rooted in ancient medicinal practices, has gained prominence in textiles through the incorporation of essential oils into fabrics. This review paper examines the historical development and effects of essential oils, leading to their integration into textiles. Essential oils, derived from botanical sources, are applied to textiles using advanced finishing techniques such as padding, exhaustion, and microencapsulation to enhance sensory appeal and well-being. The study discusses advancements in fragrance-finished textiles, referencing previous research on lavender oil treatments and their effectiveness in scent retention. Additionally, studies on consumer awareness and market potential highlight strong interest in scented-infused fabrics. However, challenges remain, particularly concerning fragrance durability and wash resistance. Advances in encapsulation technologies present potential solutions for improving scent retention. This paper underscores the intersection of aromatherapy and textiles, presenting new possibilities for wellness-oriented fabric applications in fashion, home textiles, and healthcare.