Municipal solid waste (MSW) contains plastic waste that can be used as a sustainable green substitute to reduce oil footprints, CO₂ emissions, and environmental pollution. This study aims to recycle plastic waste by manufacturing wood-plastic composites and to improve its mechanical properties by using additives, coupling agents, and lubricants. These composites are prepared by mixing 40–70% of wood flour with 20–25% of a polymer matrix. Wood was degraded at 220 °C, and then the composites were processed at 50 °C. The manufacturing process carried out in the study involved wood waste meshing, drying, shredding, drying, trimming, filling, blending, compounding, and extrusion moulding. The compounding of composites was accomplished in twin-screw extruders. Once the mixture was uniformly mixed, its final shape was given by a two-step extrusion moulding. Previously, researchers aimed at enhancing the mechanical properties of the composites, but our research focus was to improve their durability for different industrial applications. The results suggest that the impact strength is 17 MPa with 50% of wood powder ratio while the maximum value for the tensile strength is 32.5 MPa. About 50% of an increase in wood powder resulted in 8.1% bending strength increase from 26.1 to 32.8 MPa. Reducing the plastic matrix and the wood-particles water swelling ratio resulted in better mechanical properties. The wood species also affected the mechanical properties with their excellent dimensional stability and less variability. A high proportion of wood fibre tends to increase its steady-state torque and viscosity. The mechanical properties against different wood-flour proportions indicate that composite materials exhibit superior water swelling behaviour and extrusion quality.