Hydrothermal carbonization (HTC) presents a promising method for converting carbonaceous waste into renewable fuels, facilitating energy recovery. This study focuses on the HTC pretreatment of microalgae (Chlorella sorokiniana) and yard waste, examining their physicochemical structural changes, component migration, and potential for valorization via integrated HTC and pyrolysis processes. HTC notably enhances the carbon content while reducing oxygen and nitrogen levels in these feedstocks, producing a clean solid fuel with high energy density. The study investigates the pyrolytic behavior of hydrochars and their blends using different analytical techniques, kinetic modeling, and fixed–bed reactor experiments. The blends with 90% and 70% of microalgae hydrochar (CSH) exhibited the most significant synergistic effects during co–pyrolysis, evident in its devolatilization behaviors and reduced activation energies. Integrating artificial neural networks and response surface methodology models facilitated optimization of pyrolysis parameters and accurate prediction of bio–oil, biochar, and gas yields. The analytical techniques enabled characterization of pyrolysis products, revealing notable changes in bio–oil and biochar compositions, suggesting potential enhancements. The study comprehensively evaluates the HTC–pyrolysis approach’s potential for converting microalgae and lignocellulosic biomass into eco–friendly biofuels for industrial applications.