Lithium-ion batteries (LIBs) are widely used as power storage systems in electronic devices and electric vehicles (EVs). Recycling of spent LIBs is of utmost importance from various perspectives including recovery of valuable metals (mostly Co and Li) and mitigation of environmental pollution. Recycling methods such as direct recycling, pyrometallurgy, hydrometallurgy, bio-hydrometallurgy (bioleaching) and electrometallurgy are generally used to resynthesise LIBs. These methods have their own benefits and drawbacks. This manuscript provides a critical review of recent advances in the recycling of spent LIBs, including the development of recycling processes, identification of the products obtained from recycling, and the effects of recycling methods on environmental burdens. Insights into chemical reactions, thermodynamics, kinetics, and the influence of operating parameters of each recycling technology are provided. The sustainability of recycling technologies (e.g., life cycle assessment and life cycle cost analysis) is critically evaluated. Finally, the existing challenges and future prospects are presented for further development of sustainable, highly efficient, and environmentally benign recycling of spent LIBs to contribute to the circular economy.