In recent years, many cities throughout the world are facing the impact of last-mile logistics and the resulting rise in urban traffic and pollution: effects on the environment have been curbed by these dynamics. Urban traffic has a considerable impact in terms of noise emissions, road safety and air pollution: hence, both public and private parties shall undertake innovative solutions for reducing the negative effects of last-mile logistics and improving their operational effectiveness. This study aims to provide a systematic literature review on environmentally sustainable last-mile logistics. The main contributions of this paper are as follows: (1) exploring and analysing the existing literature on last-mile logistics, with a focus on various types of sustainable measures implemented by companies, governments (mainly local) and supra-national institutions; (2) clustering existing studies into five categories (i.e., agents’ preference and choices, shared logistics, stakeholders, studies on vehicles, and policy and decisions) clarifying the implications of the public economics analysis; (3) identifying the gaps and limitations of the existing literature and proposing potential issues for future research insights. The review of the literature reveals that the majority of recent studies have been based on engineering and urban planning approaches. Costs and benefits of last-mile logistics are researched with a public economics focus, gathering details from the different papers, starting from the business studies to the technology-oriented ones. This study aims at detecting the different topics and policies discussed in the literature and suggests how to incorporate them in creating new measures and policies or revamping current ones. Although the initial corpus was 583, only 108 papers were ultimately chosen for the review, since public economics studies were not thoroughly explored: following the results of this work, the topic has significant scope for further study.