The transition from a linear economy to a circular economy in municipal plastic waste management is regarded as one of the pivotal challenges in the sustainable development of contemporary cities. This research has been conducted with the objective of comparatively assessing the performance of the European Union (EU) and Iran in plastic waste management through the lens of the circular economy. The comparison is structured around six key parameters: legal and regulatory frameworks, production and consumption patterns, speed and quality of recycling, collection and disposal systems, adoption of emerging technologies, and precision in source separation and waste categorization. Findings reveal that the European Union is advancing systematically toward a circular economy by integrating preventive legislation, binding quantitative targets (e.g., the 55% plastic recycling target by 2030), and cohesive technical infrastructures. As a result, the plastic recycling rate in the EU has reached 26.5%, surpassing its landfilling rate of 23.5%. In contrast, Iran despite enacting foundational legislation (such as the 2004 Waste Management Act) confronts serious structural challenges, including ineffective policy implementation, the absence of integrated recycling infrastructure, heavy reliance on the informal sector, and a lack of transparency in official statistics. These factors have confined Iran’s plastic recycling rate to below 14%, with over 84% of plastic waste landfilled without prior separation. This study demonstrates that an effective transition to a circular economy in Iran necessitates fundamental reforms specifically, rigorous enforcement of regulations, elimination of administered pricing mechanisms, strengthening of supervisory institutions, standardization of practices, data transparency, and the promotion of informed civic participation rather than merely constructing recycling facilities.