<p>The rapid generation of non-woven fabric waste (NWFW) from healthcare, packaging, agriculture, and textile sectors presents a growing environmental challenge. This study develops an optimized catalytic pyrolysis process to convert NWFW into hydrogen-enriched diesel-grade fuel for transportation applications. A novel methodology was adopted by utilizing low-cost, waste-derived catalysts synthesized from alumina refining residue and aluminium foil waste, offering a sustainable and economical alternative to commercial catalysts. The catalytic system effectively minimized wax formation, improved hydrocarbon cracking, and lowered the process energy demand, enhancing liquid fuel recovery. The resulting catalytic pyrolysis oil (CPO) demonstrated a high calorific value of 42.3&#xa0;MJ/kg and a hydrogen content of 15.11 wt.%, making it a strong candidate for replacing conventional diesel. Engine tests on a common rail direct injection (CRDI) diesel engine at optimized conditions (400&#xa0;bar injection pressure and 26° injection timing) showed improved brake thermal efficiency, reduced brake-specific energy consumption, and emissions within regulatory limits. Advanced injection strategies successfully mitigated nitrogen oxides and unburned hydrocarbon emissions. Numerical modeling was employed to predict pyrolysis yield and engine performance, confirming the robustness and scalability of the approach. Life cycle assessment revealed that the combustion of CPO results in 2.2&#xa0;kg carbon dioxide equivalent (CO_2e)/L, 39% less than conventional diesel’s 3.3&#xa0;kg CO_2e/L. Economic evaluation indicated that CPO can be produced at around United States dollar (USD) 0.35 per litre, offering a 65% cost advantage over retail diesel (USD 1.05/L). This study presents a scalable, cost-effective, and eco-friendly solution for NWFW valorization into clean hydrogen fuel.</p> Graphical Abstract <p></p>