During the last decades construction and demolition waste (CDW) has been increasingly gaining importance in Germany and, generally, throughout Europe. Due to its large amount, optimizing CDW treatment and recycling has a high environmental and economic relevance. Significant economic benefits can be achieved through the recovery of high-quality secondary raw materials from CDW. Additionally, natural resources can be conserved, landfill volumes can be reduced, and a contribution can be made to a sustainable built environment. However, the current situation of CDW treatment and recycling is significantly limited since most of the recovered material is still normally used in backfilling applications, or even landfilled. Only 12.5 mass-% of the 587.4 million Mg of aggregates used in 2018 corresponded to recycled construction materials, which shows the outstanding remaining potential of CDW in the way towards a circular economy. Motivated by scarcer landfill space, an expected increase in CDW volumes in the future, a high demand for high-quality secondary raw materials and the above-mentioned environmental benefits, possible solutions for optimizing the recycling of CDW are discussed in the present study. One technical solution to the optimized treatment and recycling of CDW is the use of sensor technology. While previous developments on the use of sensor technology have focused on the material sorting processes, the present study shows the optimization possibilities that arise when sensors are used not only for sorting, but also for sensor-based characterization and monitoring of material flows. To this end, custom made sensor-based monitoring units via near-infrared (NIR) sensors were installed in an industrial scale waste treatment plant in Switzerland, which processed CDW mixed with commercial waste. The experiments carried out in the present study show that real-time monitoring via NIR sensors is possible in CDW processing plants. The data gathered thereby can allow the optimization of process control and improvement of product quality and yield. NIR data can be used to detect material loss and, based on this, misclassification by sensor-based sorters. Additionally, early detection of performance losses of individual machines can be performed. Material flow characteristics of CDW, such as material composition and belt occupancy, can be determined as well. Inert materials can be successfully detected and differentiated from other material types using NIR sensors. Moreover, the collected data was consistent and, therefore, could be used to monitor, balance, control and optimize the operation of a CDW processing plant.