This paper considers the potential for digital laser technology to facilitate sustainable innovation in the field of textile design and manufacture, enabling transition towards a circular economy. Using recent design research as a case study, it discusses a newly developed Laser Shibori technique and its significance in relation to circularity. Laser Shibori describes a digital moulding technique for three-dimensional surface design and sustainable textile finishing that can be used to design accurate surface architectures for synthetic textiles. Using the photothermal energy of a CO2 laser, the method combines two heat dependent processes: heat setting and textile colouration, resulting in an effect akin to shibori. Unlike the traditional craft practice, Laser Shibori offers precise digital control, repeatability and a unique aesthetic. The study demonstrated the benefit of interdisciplinary research, synthesising design and science to support sustainable material innovation. The synthesis of material science and creative design practice proved essential in developing the laser technique and created a platform for material innovation beyond creativity as discussed through potential functional application ideas and sustainability benefits. The methods described in this paper provide a system to control three-dimensional effects through controlled tension and targeted laser irradiation. The use of laser technology to create three-dimensional textile forms presents processing advantages over traditional methods: the laser does not require physical moulds or complicated set up and offers ease of pattern change through digital generation of designs. The laser process negates requirement for additional materials, offering reversible surface design effects to facilitate ease of recovery at end of primary use, thus complimenting a circular textile lifecycle in three dimensions: through efficiency, agility and recovery.