This paper combines process design and modelling with life cycle sustainability assessment to identify opportunities for improving the environmental and economic performance in the cheese industry. Considering both the production and consumption perspectives, the study considers first a range of improvement options in the cheese manufacturing process, followed by an assessment of the rest of the life cycle. For the manufacturing process, the focus is on energy efficiency and valorisation of waste with the following four options considered: Option 1 is a base case that reflects current manufacturing practice and therefore excludes energy recovery and waste utilisation; Option 2 includes heat integration applied to recover waste heat from the process; Option 3 considers the combination of heat integration with treatment of cheese whey via anaerobic digestion to produce biogas; in Option 4, heat integration is combined with treatment of whey via fermentation to produce bioethanol and animal feed. Cheddar cheese has been selected by way of example as one of the most consumed types of cheese in different countries, including the US and the UK. Using life cycle assessment and life cycle costing, the environmental and economic sustainability of cheese have been assessed for these options from farm gate to cheese-plant gate for the production perspective, and from cradle to grave for the consumption perspective. Option 4 is found to be the best alternative across all impacts and costs for both perspectives. For example, compared to the base case, the climate change impact and life cycle costs of cheese are reduced respectively by 148% and 158% for the production perspective, and by 3.4% and 8% for the consumption perspective. These reductions are mainly due to the co-production of bioethanol and animal feed. Production of biogas from whey in Option 3 has higher environmental impacts than the base case, making it the worst alternative. Taking the consumption of cheese at the UK level as an example, improvements in the manufacturing process via Option 4 could reduce the annual climate change impact of the food sector by around 209 kt CO2 eq./yr and primary energy demand by 6.7 PJ/yr, while increasing the value added of cheese by up to 11%. These results will be of interest to cheese producers, food manufacturers, consumers and policy makers.