The increasing demand for fresh water has been a global concern for decades. Desalination and water transportation systems consume an ample amount of energy, which also adds to the environmental pollution. This has led to a constant look-out for more viable options to conserve freshwater resources without compromising the environmental quality. The building sectors are remarkably the largest consumers of fresh water in the world; thus, the reclamation and reuse of greywater for non-potable purposes helps to reduce a significant amount of water consumed within a building. This study critically reviews the environmental performance of building-integrated greywater treatment systems compared to the conventional treatment systems deployed. Life-Cycle Assessment (LCA) is the method used to identify the environmental impacts associated with both the systems during their entire life span. The greywater treatment techniques and the guidelines for its reuse are also investigated. The bibliographic analysis was systematic, and the resources for this study were chosen after three stages of quality assessment. The study found physical and biological treatment techniques to be beneficial as they produce excellent quality of treated greywater for reuse. The environmental assessment by various studies prefers the reuse of greywater over its disposal. Guidelines for the reuse of treated greywater have recently been proposed by various countries and building rating systems. This study aims to address the policymakers, governmental and environmental organizations, mainly situated in the water-stressed areas such as the Middle East and North Africa (MENA) region, to raise awareness and initiate greywater reuse techniques within residential and commercial building sectors.