The clothing industry has been active in recent years to develop more sustainable and circular business models, with extensive attention to fossil fibers and cotton, although wool has received little academic attention. This study follows the valorization process of conventionally discarded wool from a sheep farm in Sweden to produce a wool sweater. The aim is to highlight important environmental and social hotspots for valorizing the waste wool in a new supply chain for the clothing company. The study employs life cycle assessment (LCA) and social life cycle assessment (SLCA) with the PSILCA database to assess different supply chains. The LCA results illustrate that the supply chain valorizing waste wool significantly reduces environmental impacts compared to conventional supply chains of merino wool. The processing of the wool and sweater assembly contribute to the largest share of the environmental impacts and are sensitive to the choice of electricity mix employed for processing and manufacturing. The results from the SLCA suggest that the supply chains involving primarily European producers have fewer social risks than the conventional supply chains for wool. Large social risks are present in the shipping between production sites in Europe, and manufacturing facilities for the wool garments, pointing to the care required to ensure social responsibility along the supply chain. The SLCA results are sensitive to the cost assumptions made for activities along the supply chain. The results provide empirical evidence and highlight areas to improve the environmental and social implications for developing a new circular supply chain.