To disclose sponsorship or not? Sponsorship disclosure is of immense importance in today's world of transparency, but the prior research reports mixed findings of its impact on consumer trust, influencer credibility, and purchase-related outcomes. This theory-based review integrates and synthesises existing literature on sponsorship disclosure in influencer marketing through the lens of dominant theoretical perspectives. Drawing primarily on the Persuasion Knowledge Model, Elaboration Likelihood Model, Attribution Theory, Signaling Theory, and Source Credibility Theory, this paper develops an integrative conceptual framework to explain how sponsorship disclosure shapes consumer cognitive processing, affective outcomes, and behavioural responses. The review demonstrates that sponsorship disclosure primarily operates as a cognitive cue that activates persuasion knowledge and shapes information processing. These cognitive responses subsequently influence affective evaluations, including trust, perceived credibility, authenticity, and attitudes toward both the influencer and the endorsed brand. Behavioural outcomes, such as engagement intentions and purchase intentions, are shown to emerge indirectly through these cognitive and affective mechanisms rather than as direct effects of disclosure. By organising disclosure outcomes within a structured theoretical framework and advancing a set of research propositions, this review clarifies why sponsorship disclosure may generate both positive and negative consumer responses across different contexts. Overall, the study contributes to influencer marketing and digital advertising literature by offering a comprehensive and process-oriented understanding of sponsorship disclosure effects. The findings also provide practical insights for influencers, brands, and policymakers seeking to balance transparency with persuasive effectiveness in social media environments.