Household hazardous waste (HHW) includes approximately 1% of municipal solid waste (MSW), which is related to the lack of efficient separate collection schemes co-disposed with MSW in many countries worldwide. In this research, the effect of HHW diversion on leachate quality and consequent reduction in risks to the environment and human health was investigated. In this regard, physicochemical parameters of MSW leachate samples with and without hazardous fraction were characterized. Next, leachate pollution index (LPI) and associated risks were assessed. The results showed that the source separation of HHW decreases the LPI value by 13.48% and improves the potential of leachate for biological treatment, leading to a reduction in leachate treatment costs and complexity. Based on risk assessment results, HHW diversion could lower cancer risks of organic compounds and heavy metals to acceptable levels for adults and children. Moreover, by the source-separating of HHW, hazard indices for aquatic and terrestrial bioassays reduced by 41.5 and 36%, respectively. Furthermore, despite the comparatively low generated amount of HHW, this fraction should be emphasized due to its unintended effects for public health and the environment.