The integration of the Internet of Things (IoT) and Cyber-Physical Systems (CPS) has revolutionized industries by enhancing connectivity, automation, and efficiency. However, these advancements bring significant privacy challenges due to extensive data collection and interconnected ecosystems. This paper provides a comprehensive analysis of privacy challenges in IoT and CPS, categorized into technical, data management, user-centric, and ecosystem-wide dimensions. Key privacy threats, such as data breaches, inference attacks, device tracking, and insider risks, are explored through case studies and empirical evidence. Existing mitigation strategies, including encryption, privacy-enhancing technologies, access control mechanisms, and regulatory frameworks, are evaluated. Despite these efforts, challenges remain, such as scalability of privacy solutions, privacy concerns in emerging technologies like 5G and AI-driven IoT, and the balance between privacy, security, and usability. The paper emphasizes the need for interdisciplinary collaboration to address these challenges, fostering trust and ensuring the sustainable development of IoT and CPS technologies. Future research directions are proposed to develop scalable, user-centric, and adaptive privacy-preserving frameworks that align with evolving technological and regulatory landscapes.