Insects are a natural component of animal diets. They contain a high amount of digestible protein and fat and are also rich in micronutrients such as copper, iron, magnesium, selenium and zinc, as well as riboflavin, pantothenic acid and biotin. In addition, insects contain bioactive and immunostimulatory constituents such as lauric acid, antimicrobial peptides and chitin. These nutritional and functional properties make insects a promising feed ingredient to replace conventional feed ingredients and as such sustainability in animal production may be improved. In the European Union (EU), since 2017 eight insect species are authorized for aquafeed. Recent relaxation of the EU feed ban rules and animal by-products legislation on September 7, 2021, also allowed the use of insect proteins in poultry and pig diets. Among the authorized insect species, some are more promising for feed purposes as they can be theoretically mass produced. More-over, these species apply the circular economy concept by bioconverting organic substrates, which find minor applications for other purposes. Advances in the development of the European insect industry are often associated with more favourable sustainability potentials of insects, compared to traditional protein sources. For the EU there is a significant overlap in ingredient use in diets for pigs and poultry. Despite multiple studies on economic feasibility, social acceptance and environmental impact, many open questions are left for the industry to deal with. Life Cycle Assessment (LCA), relying on a modular modelling approach to cover the complete spectrum of insect production and processing parameters, is a methodology which can provide viable answers and recommendations on envi-ronmental sustainability performance. For different livestock animal species, the current animal production systems, volumes of feed and composition of conven-tional diets are presented. The digestibility of insect meals and effects of their use on growth performance, product quality and health at different dietary inclusion levels are reviewed. Finally, the contribution of dietary inclusion of insect protein in animal production systems to sustainability is discussed.