This paper investigates the intersection of smart textiles, circular economy principles, and digital transformation, with a specific focus on their applications in the healthcare industry. Smart textiles offer immense potential in healthcare, enabling vital signs monitoring and measurement in both home and hospital care settings. However, their development necessitates considerations of longevity, durability, repairability, and environmentally-friendly disposal, aligning with circular economy principles and sustainability goals. This research conducts a comprehensive literature review, analyzing the interconnection between the circular economy, smart textiles, and digital transformation. The review synthesizes relevant literature to identify key findings and insights, highlighting the current state of research in this interdisciplinary domain. Moreover, the paper assesses the implications and potential impacts that arise when combining these three domains into a unified framework. By exploring the interplay between smart textiles, circular economy principles, and digital transformation, this study contributes to a deeper understanding of how these domains can be effectively integrated to drive innovation in the healthcare sector.