One practical strategy to fight climate change and promote sustainability is hydrogenating carbon dioxide (CO₂) to methanol (CH₃OH). The current study simulates and examines the impact of a CO2 recycling loop, which increases CO₂ utilization, methanol yield, and purity by recirculating unreacted CO2 back to the reactor, using DWSIM. The results demonstrate that, under ideal circumstances of 250 °C and 3 MPa, the recycling cycle maximizes the methanol yield up to 85% and increases the process efficiency of CO₂ conversion from 70 to 87%. Furthermore, sensitivity analysis verifies that the process temperature and pressure substantially impact process efficiency, and catalyst characterization establishes the catalyst’s exceptional stability and activity. Additionally, the procedure is linked to a 25% decrease in CO₂ emissions, indicating that it may find application in industrial processes. A comparative analysis of the literature demonstrates the excellent efficiency of this technique in the methanol production process. More study is required to experimentally confirm these results and examine the viability and scalability of CO₂ recycling in large-scale methanol production.