Purpose <p>Circular rebound effects remain insufficiently conceptualized within circular economy and sustainability transition research, where rebound dynamics are still predominantly interpreted as efficiency offsets or unintended side effects of circular interventions. Such approaches provide limited explanatory capacity for understanding how rebound dynamics interact with territorial infrastructures, governance arrangements, sociotechnical lock-ins, and scaling mechanisms shaping circular economy transitions. This article therefore develops a transition-sensitive diagnostic framework for interpreting CRE within territorial circular economy transitions.</p> Methodology <p>The study adopts a conceptual research design based on comparative interdisciplinary synthesis. The framework integrates insights from ecological economics, sociotechnical transition theory, industrial ecology, sociology of practices, and territorial governance studies to identify convergences, complementarities, and analytical tensions relevant to the interpretation of rebound dynamics within circular transitions. These elements are subsequently structured into a multilevel territorial diagnostic framework organized across micro-, meso-, and macro-level transition dynamics.</p> Findings <p>The article advances three principal findings. First, CRE are reconceptualized as systemic diagnostic signals revealing how circular interventions interact with sociotechnical regimes, governance structures, and territorial transition dynamics rather than generating efficiency losses. Second, the article introduces the concept of Territorial Circular Rebound Effects, emphasizing how rebound dynamics are shaped by infrastructural configurations, governance coordination, industrial specialization, and socio-metabolic interactions across territorial systems. Third, the framework identifies three rebound outcome configurations (counterproductive, neutral, and enabling) and three systemic functions (inertia, tension, and inflection) that may emerge depending on governance conditions, substitution dynamics, and transition trajectories.</p> Research Limitations <p>As a conceptual contribution, the framework requires empirical validation through comparative territorial case studies and multi-level analyses of circular initiatives.</p> Value <p>By reframing circular rebound effect as a diagnostic signal for adaptive territorial governance rather than an efficiency offset, the study advances theoretical integration between circular research and sustainability transition studies.</p>