Next-generation augmented reality (AR) promises a high degree of context-awareness - a detailed knowledge of the environmental, user, social and system conditions in which an AR experience takes place. This will facilitate both the closer integration of the real and virtual worlds, and the provision of context-specific content or adaptations. However, environmental awareness in particular is challenging to achieve using AR devices alone; not only are these mobile devices' view of an environment spatially and temporally limited, but the data obtained by onboard sensors is frequently inaccurate and incomplete. This, combined with the fact that many aspects of core AR functionality and user experiences are impacted by properties of the real environment, motivates the use of ambient IoT devices, wireless sensors and actuators placed in the surrounding environment, for the measurement and optimization of environment properties. In this book chapter we categorize and examine the wide variety of ways in which these IoT sensors and actuators can support or enhance AR experiences, including quantitative insights and proof-of-concept systems that will inform the development of future solutions. We outline the challenges and opportunities associated with several important research directions which must be addressed to realize the full potential of next-generation AR.