<p>Circular business models (CBMs) provide promising solutions to global environmental challenges by extending material lifecycles and reducing waste. Industry 4.0 technologies, particularly the Internet of Things (IoT), are key enablers of CBM strategies through enhanced resource monitoring and lifecycle management. However, there is limited empirical research on how different IoT configurations impact CBM adoption in practice. This paper aims to understand how different configurations of IoT capabilities impact the operationalization of Circular Business Models. This study adopts a configurational approach, using the Crisp-set Qualitative Comparative Analysis (csQCA) technique to analyze cases of IoT adoption from multiple industrial sectors. csQCA provides a novel method to explore the complex relationships between IoT capabilities and CBM implementation. The results show that only a few companies use IoT to execute circular practices, and many do not exploit IoT’s full potential for the transition to CBMs. Companies that adopt IoT technologies to monitor and track their production lines demonstrate significant operational impacts, especially related to increased resource efficiency. However, if not embedded within systemic circular strategies, IoT-enabled efficiency gains may exacerbate rebound effects that undermine sustainability outcomes. This work highlights the configurations of IoT capabilities that have the potential to enhance operational impacts, thereby facilitating the implementation of CBMs. By integrating the ReSOLVE framework and real-world cases of IoT application in operations, this study provides empirical insights into how IoT can drive circular practices, contributing novel evidence to the development of sustainable business models.</p>