The swift expansion of lithium-ion battery (LIB) usage in renewable energy systems and electric cars has sparked worries over the environmental effects of recycling and disposing of LIBs. The recycling of LIBs has grown in importance as the world moves toward a low-carbon economy, with substantial social, economic, and environmental ramifications. This review offers a thorough evaluation of the environmental effects of recycling LIBs, taking into account trash production, energy use, water use, and greenhouse gas emissions. We assess the current state of recycling technology and the environmental impacts of pyrometallurgical, hydrometallurgical, and mechanical processes. In order to decrease waste, lower emissions, and conserve resources, our analysis shows that a more sustainable and closed-loop recycling strategy is required. The development of more effective recycling methods, design for recyclability, and extended producer responsibility are some of the main obstacles and opportunities we find for enhancing the environmental sustainability of LIB recycling. Our analysis offers information that scholars, business leaders, and legislators may use to create plans for reducing the negative environmental effects of recycling LIBs and encouraging environmentally friendly behaviors all the way through the battery lifespan. By tackling these issues, we can guarantee a more conscientious and ecologically sustainable method of recycling LIBs, facilitating the shift toward a future with reduced carbon emissions.