Rechargeable potassium-ion batteries (PIBs) have gained attention as sustainable, environmentally friendly, and cost-effective large-scale stationary energy storage technology. However, although this technology was assumed to perform in a manner similar to that of its monovalent counterparts, huge anode volume expansion and sluggish kinetics are posing challenges in up-scaling it. Apart from the efforts to develop and optimise electrode materials, recent research endeavours have also focussed on the essential role of sustainability. These attempts have often relied on bio-derived and bio-inspired materials to mimic the effectiveness of nature. Furthermore, the use of materials with self-healing properties can alleviate electrode degradation after cycling and augment its electrochemical performance. This review summarises the development of smart materials with self-healing properties that aid in overcoming the present issues of PIBs and highlights the relevance of the interphases. In addition, state-of-the-art design strategies for bio-derived and bio-inspired materials are presented and discussed. The incorporation of recycled and sustainable materials into the manufacturing of PIBs is expected to contribute towards the ultimate goal of achieving truly circular economy ecosystems. Finally, perspectives for further advancements are provided to kindle new ideas and open questions regarding the use of new-generation materials in the development of PIBs.