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The increasing urgency to mitigate plastic pollution has accelerated the shift from linear manufacturing toward circular systems. This review synthesizes current advances in mechanical, chemical, biological, and upcycling pathways, emphasizing how artificial intelligence (AI) is reshaping decision-making, performance prediction, and system-level optimization. Intelligent sensing technologies — such as FTIR, Raman spectroscopy, hyperspectral imaging, and LIBS — combined with machine-learning classifiers have improved material identification, reduced reject rates, and enhanced sorting precision. AI-assisted kinetic modeling, catalyst performance prediction, and enzyme design tools have improved process intensification for pyrolysis, solvolysis, depolymerization, and biocatalysis. Life Cycle Assessment (LCA)–integrated datasets reveal that environmental benefits depend strongly on functional-unit selection, energy decarbonization, and substitution factors rather than mass-based comparisons alone. Case studies across Europe, Latin America, and Asia show that digital traceability, Extended Producer Responsibility (EPR), and full-system costing are pivotal to robust circular outcomes. Upcycling strategies increasingly generate high-value materials and composites, supported by digital twins and surrogate models. Collectively, evidence indicates that AI moves from supportive instrumentation to a structural enabler of transparency, performance assurance, and predictive environmental planning. The convergence of AI-based design, standardized LCA frameworks, and inclusive governance emerges as a necessary foundation for scaling circular plastic systems sustainably.