Bioenergy is an important and feasible option for mitigating global warming and climate change. However, large-scale land-use change (LUC) to expand bioenergy crops, such as sugarcane, raises concerns about the potential negative environmental and socioeconomic side effects. Such effects are context-specific, and depending on the LUC scenario and management practices, several co-benefits can be attained. We reviewed the literature and discussed how LUC and best management practices affect key components of sustainability (e.g., soil health, soil carbon (C) sequestration, greenhouse gas emissions (GHG) emissions, nutrient cycling, water quality, among others) of sugarcane-derived bioenergy production in Brazil. Sugarcane expansion has occurred predominantly over pasture areas, although converting croplands could be also an environmentally feasible option. The land transition from low-productivity pastures to sugarcane cultivation seems to be a sustainable pathway to increase bioenergy production. This LUC scenario enhances soil health and soil C sequestration over time, although soil compaction, biodiversity loss, and erosion are still challenging. Besides, adopting best management practices, such as conservation tillage, sustainable crop residue management, rational fertilization, and recycling by-products, has been fundamental to ensuring sustainable bioenergy production. Public policies and well-designed legal frameworks and regulations, such as the Forest Code and the RenovaBio legislations in Brazil, are necessary to make bioenergy production compatible with rational land use and protection. Lastly, our analysis provided insights into sugarcane expansion over a small proportion (1\%) of pasture areas in Latin American and Caribbean (LAC) and sub-Saharan African (SSA) countries, which may result in a substantial impact on global bioenergy supply. We concluded that sugarcane-derived bioenergy is a sustainable option to tackle climate change while provisioning other key ecosystem services and promoting socioeconomic development.