To address the increasing accumulation of water bottle waste and lack of effective recycling processes, water bottle waste was upcycled into a high value activated carbon product. This growing waste feedstock has proved to be a promising precursor for activated carbon, but it has not been investigated for use in the treatment of dye-contaminated effluent which is a very high-volume source of waste from textile industries. In this work, the production of activated carbon from water bottle waste by chemical activation using KOH was optimized and validated for the application as an adsorbent of textile dyes. The activation conditions of 800 °C for 1 h proved to be most optimal based on conversion efficiency, surface area, surface charge, and yield measurement. It was found that the product’s negative zeta potential (−40 mV) and high surface area (1124 m2/g), provided excellent adsorption capacity for the cationic methylene blue dye (335 mg/g). The adsorption of this representative dye was studied in detail and compared with cationic brilliant green dye and a mixture containing anionic methyl orange dye. Although the adsorption was found to depend on dye charge characteristics, there is potential for adsorption enhancement through pH adjustments. Additionally, the AC demonstrated the ability to treat mixed dye wastes containing anionic dyes despite its selective adsorption towards cationic dyes of over twice the amount. Overall, the product showed potential to be extended to a variety of textile dyes to provide excellent value for the textile industry while also helping to divert a significant amount of waste from landfills.