Eco-efficiency has been widely recognized during the last two decades as a suitable measure of a given system's progress towards a greener and sustainable development. It combines the economic welfare and the ecological impact of products or services throughout their lifecycle. The need for improving eco-efficiency leads to the development of appropriate metrics for measuring the performance of a given system and the identification of the most promising alternative solutions (eco-innovations). This paper briefly presents a methodological framework for the eco-efficiency assessment of water-use systems, using a life-cycle oriented approach and a set of selected eco-efficiency indicators. The environmental performance of the system is evaluated through the relevant midpoint environmental impact categories, while the economic performance is measured using the total value added to the system's final product due to water use. The proposed framework is applied to the textile industry in Biella, Italy. The analysis reveals that the major environmental problems of the textile industry in the region are freshwater resource depletion, as well as human toxicity and ecotoxicity (both aquatic and terrestrial). The identification of the environmentally weak stages of the system has led to the selection of alternative actions, which could upgrade the whole value chain and improve the overall eco-efficiency. Six innovative technologies are examined and two alternative technology scenarios are formulated. The first scenario focuses on resource efficiency, while the second one focuses on reducing the emissions to water. The results show that all technologies could potentially improve the majority of the environmental performance indicators of the system. However, the scenario towards pollution prevention and control has proven to be not economically viable due to the high investment cost required and the current economic conditions, while the implementation of the scenario towards resource efficiency requires additional economic incentives and governmental support in order to be considered feasible by the industrial stakeholders.