Learning Factories (LFs) are becoming even more relevant in the age of new technologies, diversified skill requirements, and the need for improved operations. Despite this trend, environmental sustainability practices remain under-explored in the LF environment. Given the importance of environmental sustainability, we recognise that circular economy (CE) principles are a sound means of achieving environmental sustainability in various contexts. This research aims to provide foundational information to scholars and practitioners to develop CLDs for CE principles within LF contexts. The R-strategies were mapped onto the process flow designed for CE outcomes. The Interpretive System Approach was used to extract the CE principles and LF concepts from the literature. This study suggests ways to enhance student teaching and learning by employing Learning Factories. Our findings advise on the future development of CE-LF CLDs alongside a research agenda. This research explores and reports on CE principles and their dynamics as a source of knowledge that can be harnessed to make a meaningful and sustained impact on society. This research suggests key fundamental concepts within LF and CE paradigms and the interrelationships between the concepts that require further study to develop a systems thinking study and model.