The following paper explores circular economy as a model of management within the framework of sustainable development. Its structure comprises 4 parts. The first part illustrates the role of sustainable development as an emerging paradigm in the theory of modern economics and in the recent policy of the European Union. In the second part, the authors demonstrate the applicability of sustainable development based on the relevant management models on the micro, meso and macro levels of economy. The third part discusses the concept of circular economy, in particular the various definitions of the phenomenon, its advantages over the linear economy, the role of innovations in its development and how to overcome barriers to its application. The fourth part outlines the current state of implementation of the circular economy in the EU in regard to its normative implications for the member countries. The conclusions close the exploration. The paper is theoretical, based on the review of the international literature on the subject. The unique contribution of the authors consists of the systematic analysis of the term circular economy as a holistic model of sustainable development and of illustrating the benefits of its promotion in the management practice.