The teaching-learning process in engineering aims to meet current societal demands and address real challenges faced by businesses and the job market. Challenge-based learning (CBL) has gained traction as an active and innovative approach in engineering education, introducing real challenges and open questions to the classroom regarding environmental sustainability and issues faced by Industry 4.0. These challenges require resources and technology that turn the teaching-learning process into an open system, demanding partnerships beyond academia for validating deliverables and projects. Following the PRISMA 2020 guidelines, this study aimed to systematically analyze the implementation and implications of CBL for competencies development. Following the inclusion and exclusion criteria of the PRISMA method, 62 articles were used for abstract analyses to identify methods, workload, resources, structure, technology, and stakeholder integration, as well as to answer the research questions. The studies were categorized into three types of applied challenges: 1) social and environmental sustainability; 2) Industry 4.0; and 3) those related to Educational Institutions. A total of 46 articles were analyzed in their entirety, and summarized in three tables. All analyzed studies showed that CBL is effective according to summative and formative assessments, leading to sociotechnical competencies development through experience with real-world challenges, teamwork, and interaction with external partners. As most studies are qualitative, there is room for quantitative investigations to better justify the relevance of CBL, especially in terms of adaptive and personalized learning. Moreover, the workload and complexity imposed by CBL, particularly on teachers, warrant further study to facilitate implementation and engagement.