The Enhanced Factory for Extra-terrestrial Space Technology Operations (EFESTO) project presents a strategic approach for establishing sustainable manufacturing and recycling operations in Low Earth Orbit (LEO), aiming to mitigate launcher constraints, support long-duration missions, increase space stations independence from Earth resupply and enhance circularity of the resources in space. Utilizing Model-Based Systems Engineering (MBSE), this research aims at identifying and investigating the enabling technologies for in-space manufacturing (ISM) and waste management in microgravity environments. This paper details the comprehensive process, from conception to implementation, including environmental impact assessments and navigating market uncertainties. Preliminary findings demonstrate the project’s capacity to bolster space operations, indicating a shift towards a sustainable, service-oriented economy in space. The systematic structure of the project addresses a multitude of challenges, from the development of appropriate space technologies and waste management systems to strategic market and regulatory considerations. Ultimately, EFESTO aims to contribute significantly to extra-terrestrial development, enhancing the resilience and adaptability of space operations while promoting a circular economy and compliance with evolving space standards.