To reduce environmental pollution and reliance on fossil resources, polyethylene terephthalate as the most consumed synthetic polyester needs to be recycled effectively. However, the existing recycling methods cannot process colored or blended polyethylene terephthalate materials for upcycling. Here we report a new efficient method for acetolysis of waste polyethylene terephthalate into terephthalic acid and ethylene glycol diacetate in acetic acid. Since acetic acid can dissolve or decompose other components such as dyes, additives, blends, etc., Terephthalic acid can be crystallized out in a high-purity form. In addition, Ethylene glycol diacetate can be hydrolyzed to ethylene glycol or directly polymerized with terephthalic acid to form polyethylene terephthalate, completing the closed-loop recycling. Life cycle assessment shows that, compared with the existing commercialized chemical recycling methods, acetolysis offers a low-carbon pathway to achieve the full upcycling of waste polyethylene terephthalate.