Lithium has emerged as a critical element in contemporary society. It has been classified as an indispensable feedstock in the manufacture of lithium-ion batteries for electric mobility, portable electronics, and stationary energy storage systems, which are essential for the integration of intermittent renewable energy sources. This metal also has other industrial applications and is projected to support future developments in semiconductor and aerospace technology. However, the exponential growth in global Li demand driven by energy transition and technological innovation requires a resilient and sustainable supply chain where both technological and environmental challenges should be addressed. This review discusses and analyzes some of current challenges associated with the Li supply chain given a particular emphasis on its separation methods. First, statistics of the Li market and its applications are provided, including the main sources from which to recover Li and the environmental impact associated with conventional Li extraction techniques from mineral ores and salar brines. Different separation methods (e.g., solvent extraction, adsorption, ion exchange, membrane technology) to recover Li from different sources are reviewed. Recent advances and developments in these separation strategies are described, including a brief analysis of their main limitations and capabilities. The importance and potential of recycling strategies for end-of-life batteries and industrial residues are also highlighted. A perspective on the gaps to be resolved with the aim of consolidating the Li supply chain to support the energy transition agenda is provided in this review.