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Smart wearable electronic textiles (e-textiles) that can detect and differentiate multiple stimuli, while also collecting and storing the diverse array of data signals using highly innovative, multifunctional, and intelligent garments, are of great value for personalized healthcare applications. However, material performance and sustainability, complicated and difficult e-textile fabrication methods, and their limited end-of-life processability are major challenges to wide adoption of e-textiles. In this review, we explore the potential for sustainable materials, manufacturing techniques, and their end-of-the-life processes for developing eco-friendly e-textiles. In addition, we survey the current state-of-the-art for sustainable fibers and electronic materials (i.e., conductors, semiconductors, and dielectrics) to serve as different components in wearable e-textiles and then provide an overview of environmentally friendly digital manufacturing techniques for such textiles which involve less or no water utilization, combined with a reduction in both material waste and energy consumption. Furthermore, standardized parameters for evaluating the sustainability of e-textiles are established, such as life cycle analysis, biodegradability, and recyclability. Finally, we discuss the current development trends, as well as the future research directions for wearable e-textiles which include an integrated product design approach based on the use of eco-friendly materials, the development of sustainable manufacturing processes, and an effective end-of-the-life strategy to manufacture next generation smart and sustainable wearable e-textiles that can be either recycled to value-added products or decomposed in the landfill without any negative environmental impacts.