Due to the increase in consumption and awareness of environmental impacts, switching to new business models has become mandatory in the textile industry. The aim of this study is to investigate the contribution of using mechanically recycled cotton fiber instead of virgin cotton fiber, which is one of the most important raw materials in textiles and grown using a high amount of water and pesticides, and combined heat and power (CHP) plant instead of grid energy in terms of the environmental impacts, cost, and quality of denim fabric product via 8 scenarios using an integrated sustainability assessment approach. The scenarios were identified according to the use of the CHP plant in the manufacturing process and the ratio of recycled cotton fiber used in the product. Environmental impacts were analyzed using the life cycle assessment approach (LCA). Besides the environmental impact analyses, product quality and cost-savings of all scenarios were also examined using TODIM (an acronym in Portuguese for Interactive and Multicriteria Decision Making) method to apply an integrated approach for sustainable denim fabric production. Global warming potential (GWP), acidification potential(AP), eutrophication potential(EP), water use, and cumulative energy demand(CED) were investigated as environmental impact categories in the production of denim fabric. In addition to environmental impact categories washed weight, tear, tensile, and cost-saving were determined as the attributes of TODIM. According to the LCA results, the highest environmental impact improvements were obtained as 98% water use, 90% EP, 74% AP, 63% CED, and 54% GWP for scenario 8 with 100% recycled cotton and CHP plant use. Besides, the use of the CHP plant offered 4% GWP and 0.42% water usage saving regardless of the recycled cotton ratio. In addition, scenario 8 also showed the best performance for the integrated sustainability assessment by TODIM. It is obviously demonstrated that the use of the mechanically recycled cotton as a raw material and CHP plant as an energy source through the manufacturing processes of denim production will facilitate the transfer of traditional linear economy business models of companies to the circular economy. (C) 2020 Elsevier Ltd. All rights reserved.