This systematic review examines the comparative effectiveness of Agile and traditional project management methodologies, focusing on their application in dynamic IT environments and well-defined industries. Utilizing the PRISMA guidelines, a total of 45 peer-reviewed studies published between 2005 and 2023 were analyzed. The review found that Agile methodologies consistently outperformed traditional approaches in dynamic settings, offering greater flexibility, faster project delivery, and higher customer satisfaction through iterative cycles and continuous stakeholder engagement. However, traditional methods, such as Waterfall, were found to be more effective in projects with fixed scopes and stringent regulatory requirements, providing better control and predictability. The review also highlights the growing adoption of hybrid project management models, which combine Agile’s adaptability with the structure of traditional methods, particularly in large or complex projects. The findings underscore the importance of selecting the appropriate methodology based on project-specific factors, with Agile excelling in fast-changing environments and traditional methods being more suitable for regulated industries. Further research is recommended to explore Agile’s applicability in non-IT sectors and the long-term effectiveness of hybrid models.