Brazil is a major sugarcane producer and its production more than doubled over the last decades to meet global bioenergy demands for reducing crude oil dependency and mitigating climate change. Nevertheless, the adverse effects of this growth on jeopardizing the sustainability of sugarcane production are not known, especially when environmental impacts of agricultural inputs and production processes are not judiciously managed. This article is a comprehensive review of the state-of-the-knowledge and the main advances made thus far in the sugarcane sector. Here, we review the major environmental impacts of rapidly expanding sugarcane plantation on the land use change and its competition with food production, as well as those associated with sugarcane cultivation in Brazil. Our main finding are that sugarcane plantation did not contribute to direct deforestation, and its expansion on degraded pastures with the attendant increased yields of food crops and livestock intensification decreased land competition between food and sugarcane. Non-burning sugarcane harvesting is a win-win strategy because of its benefits involving agronomic and environmental aspects, but soil compaction is among the main issues in sugarcane cropping systems. Sugarcane is highly efficient in terms of nitrogen use efficiency, which is an important factor for its high energy balance. But, special attention should be given regarding emissions of nitrous oxide when straw mulching is combined with application of nitrogen fertilizer and vinasse. Recent advances in the sugarcane sector also show significant reductions in water consumption, making sugarcane ethanol one of the most favorable options in terms of water footprint. Growing realization of a vast potential indicates the need to further enhance the environmental benefits of sugarcane ethanol by optimizing the agricultural production chain. Based on this improved knowledge, the adoption of best management practices is among researchable priorities that can be developed to consolidate the large potential of sugarcane production towards greater sustainability.