This research focuses on the development of an environmentally friendly composite directly from recycled high density polyethylene (rHDPE) grocery bags without changing their film form. Untreated and alkali-treated hemp fibers are used as reinforcement for a composite with recycled High Density Polyethylene (rHDPE) and a combination of rHDPE and virgin HDPE (vHDPE). Grocery bags and hemp fibers are characterized using Fourier transform infrared spectroscopy (FTIR), Differential Scanning Calorimetry (DSC), and thermogravimetric analysis (TGA). Fiber preforms are produced using a hydro-entanglement method and compression molded with HDPE and/or rHDPE at weight fractions of 30, 40, and 50%. The hemp fiber HDPE composites are characterized and tested for their tension and flexure performance. The results show an improvement in mechanical properties when using treated fibers as well as the addition of vHDPE to the polymer matrix. The highest tensile and flexural strength values for the pure rHDPE composite were acquired after adding 40 and 50% weight fraction of treated fibers, respectively. An increase of around 10 MPa on both of these properties was found when using the optimized combination of the recycled and virgin matrix materials with 40 and 50% weight fraction of reinforcement, respectively. It is concluded that the composite made of hemp fibers and recycled plastic bag has relatively good mechanical properties and can be potentially used for secondary structural use.