This research study evaluates the impact of low-density polyethylene (LDPE) modified asphalt binder on the mechanical performance and economical feasibility of asphalt concrete (AC) mixtures. LDPE-modified mixtures were compared with conventional mixes prepared with various binders commonly used in India, i.e., VG 30, VG 40, Polymer-Modified Binder (PMB), and Crumb Rubber Modified Binder (CRMB). LDPE-modified mixtures exhibit superior mechanical performance, increasing the stiffness of AC mixtures by 171% and 125% at 25 °C and 35 °C, respectively, compared to VG 30 base binder. Additionally, the indirect tensile strength (ITS) improved by 51% over VG 30. LDPE-modified mixtures also showed improved resistance to permanent deformation, with RTIndex values up to 133.46% higher than VG 30, and higher fatigue resistance, as indicated by increased CTIndex values compared to VG 30 and CRMB. However, the CTIndex values for LDPE-modified mixtures were 26.32% and 56% lower than those for VG 40 and PMB, respectively. Pavement analysis using 3D-Move showed lesser deflections at pavement layer interfaces, resulting in higher rutting and fatigue life for LDPE-modified pavements. Furthermore, LDPE-modified pavements showed up to 57% higher fatigue life (Nf) and up to 42.33% higher rutting life (Nr) than other pavements. The economic analysis showed that the cost of LDPE-modified pavements is comparable to VG 40 and around 10% more economical than pavements containing PMB. Using LDPE also offers environmental benefits by repurposing up to 750 kg for every kilometer of single-lane pavement section having 50mm thick surface course. Overall, LDPE-modified asphalt mixtures present a sustainable and high-performance solution for asphalt pavement construction.