The building sector is constantly innovating in its use of materials with regards to sustainability. There is a need to use cost effective, environmentally friendly materials and technologies which lessen the impact of a construction in terms of its use of non-renewable resources and energy consumption. Cellulose fibre insulation is an eco-friendly thermal insulation material made from recycled paper fibres. It offers good thermal properties and has a low embodied energy. However due to lack of expertise in its application and properties, cellulose insulation is not widely used in comparison to more traditional insulation materials. The present paper reviews the available research on cellulose fibre insulation, its manufacture, installation, and performance. The paper focuses the physical properties of cellulose insulation, the environmental factors that affect these properties, and possible means of future innovation.