<p>Efficient recycling of digestate as fertilizers is crucial to achieve a rapid expansion of biogas production in Sweden and Europe. This study investigated if and to what extent the biogas and biofertilizer markets are connected and interdependent using the lens of sustainable market-shaping in a case study of the island Gotland, Sweden. We used interviews and document analyses to identify processes and connections that have impacted on how the biogas and biofertilizer markets have developed on the island. Using a framework that describes three phases of market development, we found that in recent years, the biogas system <i>narrative</i> has begun to incorporate the role of biofertilizers to enhance the biogas systems´ circularity. In contrast, the <i>proving</i> and <i>the exchange practices</i> of the market shaping processes are not adequately aligned to support the growth of a biofertilizer market. For the biogas market, growing demand for liquefied gas suggests that proximity to compressed gas markets will not be a determining factor for locating new biogas plants. However, spatial considerations are crucial for developing a biofertilizer market, especially if the aim is to distribute biofertilizers to agricultural areas that lack access to circular nutrients. Our results show that an expansion of the biogas market will not automatically shape a biofertilizer market or improve nutrient redistribution. Instead, a central actor needs to take responsibility for market shaping, possibly as part of a food security narrative where biogas producers could also take on the role of more actively promoting efficient use of their biofertilizers.</p>