We investigate the entanglement between a spin and its environment in impurity systems which exhibit a second-order quantum phase transition separating a delocalized and a localized phase for the spin. As an application, we employ the spin-boson model, describing a two-level system (spin) coupled to a sub-Ohmic bosonic bath with power-law spectral density, J (ω) ∝ ω s and 0 < s < 1. Combining Wilson’s numerical renormalization group method and hyperscaling relations, we demonstrate that the entanglement between the spin and its environment is always enhanced at the quantum phase transition resulting in a visible cusp (maximum) in the entropy of entanglement. We formulate a correspondence between criticality and impurity entanglement entropy, and the relevance of these ideas to nanosystems is outlined.