Construction and demolition (C&D) waste from the construction industry is often produced in excess volumes. It negatively impacts the environment by depleting Earth’s supplies, polluting the environment, and causing difficulties in waste management. The shift from a linear to a circular economy (CE) provides a sustainable alternative with waste reduction, reuse, and recyclability principles. This study evaluates adaptive reuse as a key strategy for achieving a circular economy in the construction industry. The study uses CE indicators, such as input, process, and output metrics, showing that adaptive reuse facilitates material saving, cost reduction, and environmental footprint improvement. Through case studies, the study examines various adaptive reuse approaches and highlights the effectiveness of reuse strategies to decrease landfills, increase material life, and promote material circularity. A material matrix was developed to categorize the materials according to the reuse potential of wood, metal, and bricks. This study highlights the transformative role of adaptive reuse in achieving circular economy principles. This study will encourage policymakers, architects, and urban planners to utilize C&D waste and build a sustainable environment.