Fast fashion is a clothing supply chain model that is intended to respond quickly to the latest fashion trends by frequently updating the clothing products available in stores. The shift towards fast fashion leads to shorter practical service lives for garments. Collaborative consumption is an alternative way of doing business to the conventional model of ownership-based consumption, and one that can potentially reduce the environmental impacts of fashion by prolonging the practical service life of clothes. In this study, we used life cycle assessment to explore the environmental performance of clothing libraries, as one of the possible ways in which collaborative consumption can be implemented, and compared the advantages and disadvantages in relation to conventional business models. Furthermore, the key factors influencing the environmental impact of clothing libraries were investigated. We based our assessment on three key popular garments that are stocked in clothing libraries: jeans, T-shirts and dresses. The results showed the benefits of implementing clothing libraries associated with the garments’ prolonged service lives. Therefore to achieve environmental gains, it is important to substantially increase garment service life. Moreover, the results quantitatively demonstrated the potential risk of problem shifting: increased customer transportation can completely offset the benefits gained from reduced production. This highlighted the need to account for the logistics when implementing collaborative consumption business models.