"Any pieces of clothing, from any brand and in any condition are accepted. In return, the customer will receive a voucher for each bag brought," the company said in a statement.
The value of the voucher was not specified.
In 2011, the retailer carried out a pilot clothes recycling project in Switzerland. In 17 of the company's Swiss stores, customers were given a voucher when they brought in bags of worn clothing to be recycled.
The initiative will now be expanded to all 48 countries where H&M has stores.
“Our sustainability efforts are rooted in a dedication to social and environmental responsibility," said H&M CEO Karl-Johan Persson.
"We want to do good for the environment, which is why we are now offering our customers a convenient solution: to be able to leave their worn out or defective garments with H&M."
The Swedish fashion retailer is relying on the expertise of the company I:Collect, which specializes in redistributing still-wearable clothes to "challenged economies" or recycling them into industrial products, such as cleaning cloth, paper, insulation, carpet underlay, surface covering, and textile fibres.
The I:Collect website refers to statistics from the US Council of Textile Recycling to illustrate how most clothing in today's consumer society ends up in landfills.
Statistics show the average American throws away about 30 kilogrammes of clothing per year.
The national total thus inches up towards 8 billion kilogrammes, of which only 15 percent is recycled.
German retailers Reno and Adler already work with I:Collect, which on Thursday had yet to announce its cooperation with H&M on its website.
"We know that you value pragmatic innovations, in particular when they save you money and make it easy for you to do the right thing," the I:Collect promotional video says.
Offering customers an incentive to hand back worn clothing is part of a larger sustainability drive, according to H&M's website.
Other initiatives include all carrier bags being made of recycled material.
"This change has led to estimated savings in CO2 emissions of approximately 34 percent relative to conventional plastic," the company writes.