["Psychology &Marketing, EarlyView. ", "\nABSTRACT\nConsuming luxury products and services has received little systematic attention as a potential pathway to consumer well‐being, despite sporadic evidence suggesting that luxury experiences may catalyse self‐transformational processes and happiness‐related outcomes. Synthesising insights from 109 academic articles, we examine how and why luxury consumption contributes to short‐ or long‐term well‐being, with happiness as a key psychological dimension encompassing hedonic and eudaimonic forms. Findings suggest that the answer might differ for traditional/masstige luxury, which often prioritises temporal hedonic gratification, and for unconventional luxury (e.g., experiential, ethical, sustainable), which is more aligned with eudaimonic well‐being. Our analysis identifies key socio‐psychological, cultural, and contextual mechanisms that shape the luxury‐induced well‐being. We propose a dual‐pathway conceptual framework that reconceptualises luxury as a driver of self‐transformation, reconciling pessimistic views of luxury as illusory with optimistic perspectives on its transformative potential through intrapersonal and sociomoral pathways. This framework extends extant consumer research's emphasis on affective and motivational dimensions, offering seven future‐oriented research propositions to guide subsequent inquiry. Conclusively, the study provides pathway‐specific design levers for managers to align luxury with sustainability and post‐materialist values, while delineating critical methodological gaps for future research, specifically prioritising longitudinal assessments and meta‐analytic validation to empirically weight transformative effects.\n"]