The pursuit of sustainable practices in manufacturing has sparked an increased interest in recycling and reusing materials to reduce waste and environmental effect. One interesting technique is incorporating recycled materials to develop advanced composite materials. In this study, we focus on utilizing recycled Inconel IN718 powders as reinforcement particles in AZ31D. Powders of IN718 finer than 37 μm, developed from machining chips through high energy ball milling process, are infused into AZ31 through friction stir processing (FSP), enabling a circular economy practice in advanced material development. The resulting composite material is evaluated for its microstructure and mechanical performance. Microstructural study reveals a uniform distribution of reinforcement particle inside the matrix throughout the processed zone. Strong interfacial bonding between the matrix and reinforcement, and the addition of dispersion strengthening mechanisms helped reducing the tension/compression yield asymmetry problem. The study highlights the use of recycled materials in composites to achieve sustainability in manufacturing.