The built environment significantly contributes to global carbon emissions, making the search for sustainable construction alternatives critical in addressing climate change. Prefabricated buildings offer a promising solution to reduce environmental impacts through more efficient construction methods, reduced material waste, and potential for lower carbon emissions across their life cycle. This paper systematically reviews recent studies on the environmental performance of prefabricated buildings, focusing on a life cycle perspective. It identifies key gaps in current research, particularly regarding system boundaries, assessment methods, and regional variations. The review emphasizes the need for more comprehensive and standardized assessment methodologies to enhance comparability and accuracy in evaluating environmental performance. The paper concludes by proposing future research directions aimed at bridging these knowledge gaps and advancing sustainable solutions for prefabricated buildings across various life cycle stages.