In this paper, we analyze the progress of tourism towards sustainability and innovation through a systematic literature review summarizing the last five years of research strictly focused on innovation and sustainability applied to tourism. This research comprises a range of theories, practices, methods, and results pursuing innovation and sustainability across different levels, stages, and drivers, and in many tourism contexts. Wide, in-depth, and structured analysis, evaluation, and examination (using the PRISMA and VOSviewer tools) of a final sample of 50 scholarly papers from 27 journals, published between 2017 and the first quarter of 2021, were undertaken. Current publications emphasize qualitative, quantitative, and mixed research methods, as well as statistical and econometric methods, such as descriptive statistics, factor analysis, and structural equation modeling. This study categorizes the four major topics identified, sustainability, innovation, sustainable development, and sustainable tourism, which comprised the contextual dimensions and relevant stages of the subject areas examined. This systematic literature review highlights advances and the significantly increasing overall number of papers over recent years. Currently, sustainability is in a more advanced state compared to innovation. The outcomes highlight that the indicators of sustainability and innovation still need further analysis within the tourism context. However, more concrete process indicators are needed for continuous improvement of the front-end of innovation and sustainable tourism. The results help in better understanding the sustainability and innovation process as applied to tourism. In particular, this study explores further direct linkages between sustainability and innovation and tourism, discussing and providing new future directions aligned with the closing remarks as well as a strategic agenda for future action post-COVID-19.