The frequency of natural disasters is exacerbated by the escalating impacts of climate change with the need for effective relief shelters for victims and displaced individuals. Providing accessible and easy-to-assemble relief shelters is essential in addressing these needs. Due to climate-related challenges and the need for sustainable solutions, the integration of circularity principles in shelter design has become imperative. Circular economy principles promote the efficient use of resources, minimising waste generation and the cost of shelters. Moreover, a considerable number of people usually suffer from homelessness, and an increasing number of families live in slums in every part of the globe. All such people are entitled to be housed in affordable, safe, and appropriate shelters for at least several months after a disaster until they can either rebuild their former houses or find somewhere decent to settle after recovering from the hardship. With the aim of investigating the immediate housing needs of people after a disaster, this paper identifies the essential factors that must be taken into account during shelter design. The paper also presents the prototype developed on the basis of theoretical criteria and the identified factors. The paper’s main objectives were to design an easy-to-assemble emergency shelter on circular economy principles, identify critical factors for the circularity and buildability of the shelter, and present a proposed smart shelter acceptance model. The methodology behind the research involves conducting an intensive literature review and creating a novel prototype of a smart disaster relief shelter on the basis of long-run laboratory work and various prototype iterations. The paper presents the details of the novel prototype and shows materials that enhance the circularity of the shelter, according to a unique architectural design strategy of ‘reusing’ materials to enhance circularity practice in the design and construction sectors. The prototype was developed in a workshop after 6 months of reiterations using plastic water bottles, basic pipes, and other reusable materials. Then, by incorporating the essential factors, a set of criteria was designed that can be used as a guide for the architectural design of shelters. The criteria offered in this paper are useful to evaluate each factor’s importance in shelter design. In total, 51 effective factors in designing and constructing such accommodation are presented, clustered into five design strategy groups: social–cultural, physical–technical, environmental, economic, and organisational.