Additive manufacturing (AM) of composite materials, and especially fiber-reinforced plastics, has considerable advantages in terms of lightweight production of complex and customizable parts in the aerospace, automotive and biomedical sectors, among others. Nonetheless, the issues of anisotropic mechanical characteristics, irregular distribution of fiber, ineffective bonding between layers, and sustainability hinder the wider application to industries. In the given paper, the authors conduct a systematic overview of the state of the art of fiber-reinforced 3D printing including adverse mechanical and process-related challenges and the latest developments in material reinforcement, process enhancement, and environmental friendliness. The results indicate that recycled and reinforced composites, when processed under controlled conditions and treated with suitable surface modifications, can achieve mechanical strength comparable to that of virgin materials. This makes them appropriate for demanding structural applications. This is further illustrated through a graph showing modulus enhancement via fiber reinforcement. The research also examines important regulatory issues and lifecycle factors that must be considered to expand the use of composite additive manufacturing. What sets this study apart is its comprehensive methodology, which merges expertise in materials science, process optimization, and sustainability to deliver practical recommendations and useful guidance for the field. The findings are to inform researchers, manufacturers and policymakers on how to beat the current shortcomings and fast track the uptake of sustainable composite additive manufacturing in mass industrial production.