Psychological well-being plays a crucial role in shaping students' academic success, emotional resilience, and overall educational experiences, while also significantly influencing teachers' job satisfaction and effectiveness. However, increasing academic pressures, institutional challenges, and digital advancements have posed new threats to psychological well-being in educational settings. The findings of this article highlight the crucial role of cognitive-emotional factors such as emotional intelligence, self-efficacy, motivation, and resilience in fostering psychological well-being. Social support networks, institutional interventions, and digital literacy also emerged as key contributors, while excessive social media use and academic stress were identified as risk factors for psychological well-being. Additionally, mindfulness-based interventions and AI-driven mental health tools showed potential in mitigating psychological distress and enhancing adaptive coping mechanisms. This review underscores the need for an integrated, multidimensional approach that combines psychological training, institutional support, and digital wellbeing strategies to promote sustainable well-being outcomes for students and teachers. The implications provide valuable insights for policymakers, educators, and mental health practitioners in designing evidence-based interventions to foster psychological well-being in education.