This study examines the integration of digital technologies (DT) in prefabricated timber industry (PTI), addressing the research problem of optimising sustainability and efficiency in the building lifecycle. The methodology involves a comprehensive review of existing literature and practical applications, focusing on the impact of digital tools like Building Information Modelling and Material Passports. Key findings reveal that digital technologies promote sustainable practices by reducing resource consumption, waste generation, and carbon emissions. Furthermore, these technologies enable the automation of sustainability assessments and facilitate the sharing of building information. However, challenges such as inadequate interdisciplinary synergy, lack of standardised practices, and limited resource availability hinder widespread adoption. The implications of this research highlight the necessity for collaborative action, supported by political initiatives and regulatory frameworks, to fully integrate digital transformation and circular economy principles into the timber construction industry. This integration can optimise building maintenance and end-of-life material disposal, contributing to circular construction methodologies and a forward-thinking vision for the future of timber construction.