The circular economy (CE) offers a compelling framework to address the environmental burdens of the prevailing linear construction model, which is characterised by intensive resource extraction, production, and disposal. Residential buildings contribute a significant share of this impact within the construction sector. Passive House (PH) design has emerged as a leading strategy for minimising operational energy consumption through superior energy performance and an extended building lifespan. However, despite its potential, existing research on PH predominantly emphasises operational energy while largely overlooking the integration of CE principles, particularly in relation to embodied energy and material circularity. Addressing this gap offers an opportunity to advance low-carbon housing solutions and accelerate the decarbonisation of the residential sector. This study explores how CE interventions can improve the environmental performance of PH by addressing embodied energy and material circularity across the building’s lifecycle. An integrative literature review approach was employed to critically analyse and synthesise existing knowledge in CE and PH, helping to identify synergies, research gaps, and opportunities for integration. The findings reveal strong complementarities between CE and PH, highlighting how strategies such as bio-based and lime-based materials, increased use of recycled and secondary contents, design for disassembly with material passports, modular and prefabricated construction, and retrofit-first approaches can substantially reduce embodied energy while maintaining PH performance. This research broadens the scope of PH beyond operational efficiency, providing a structured context for researchers, designers, and policymakers to prioritise CE–PH integration. Additionally, it offers strategic insights to advance circular, low-carbon residential construction pathways.