Polystyrene (PS) composite foams are an intriguing class of materials that are well established for thermal insulation in construction and lightweight recyclable components in automotives. Research has shown the remarkable properties of these foams in terms of thermal and sound insulation and fire retardancy that can be enhanced by incorporating carbon fillers such as graphite, graphene, and biochar. Several methods have been examined by researchers to mix carbon with the polystyrene matrix and prepare PS carbon composite foams, which can broadly be categorized into suspension polymerization, solution mixing and melt blending. These methodologies along with foaming techniques for the expansion of PS using various blowing agents are reviewed. We also review the most relevant research studies in the field of PS carbon composite foams for insulation (thermal and sound) and fire retardancy. Due to its high infrared radiation absorption capacity and hetero nucleating action, expandable graphite and graphene can lead to excellent thermal and sound insulation along with fire retardancy in a PS foam, thus resulting in significant energy savings in a building. Biochar, due to its inherent low thermal conductivity and nucleating action, modifies the foam morphology, leading to enhanced heat and sound absorption and thus is a low-cost renewable carbon alternative that promotes the circular economy.