Increased interest in space exploration demands a shift in the design and manufacturing of space systems. Traditionally, space structures are limited by constraints associated with launch systems that affect cost, volume, and mass. The concept of Factory in Space (FIS) proposes the fabrication of systems in space to circumvent the launch constraints. FIS offers a transition to a circular economy in space by minimizing resource consumption and creating a self-sustaining factory ecosystem. This paper evaluates the role of circular design in FIS. Circular design in FIS leads to a reduction in design complexity and modular designs that could enhance space exploration. Material selection, modular design, design for robustness, and lifecycle thinking are highlighted as factors that influence design for circularity in FIS. Finally, the challenges associated with circularity in FIS are presented