This paper addresses the impact of Smart Product-Service Systems (Smart PSS) on the economic and environmental sustainability of capital goods. With a global focus on sustainable development, manufacturing companies are under pressure to improve the sustainability of their products and production while still meeting individual customer demands. One strategy being used is the implementation of PSS with the added use of digital technologies for more sustainable value and business models. The paper involves a review of existing literature on the topic to determine the definition of Smart PSS and its elements in relationship to sustainability. The paper concludes that Smart PSS can offer personalized customer-specific solutions that improve resource efficiency, but manufacturing companies need to balance conflicting goals and assess multiple criteria to ensure that these systems are economically and environmentally sustainable. The study highlights the need for further research in this area for a multi-criteria decision framework and deepen the understanding of Smart PSS’s potential to increase sustainability in manufacturing.