Extensive construction augmenting the infrastructure and real estate projects underpin Saudi Arabia’s Vision 2030 of sustainable cities. A part of this struggle involves the transformation of the existing infrastructure together with new construction, which generates a large amount of construction and demolition waste (CDW). In the absence of a structured life cycle assessment (LCA) framework, the waste management companies are planning future scenarios (phased expansions of material recovery facilities to improve the recycling rate) primarily on economic grounds. This study assesses the environmental impacts of the existing and planned CDW management practices of the Saudi Investment Recycling Company in Riyadh City by dint of LCA. Impact 2002+ performs life cycle impact assessment of the base case (45% recycling), four treatments (61, 76, 88, and 100% recycling), and zero waste scenarios. The study demonstrates the benefits of current CDW (mixed soil, concrete blocks, clay bricks, glazed tiles, and asphalt) recycling in terms of avoided impacts of non-renewable energy, global warming, carcinogens, non-carcinogens, and respiratory inorganics potentially generated by landfilling. For the treatment scenario of 100% recycling, CDW conversion into a wide range of aggregates (0–50 mm) can replace 10–100% virgin aggregates in backfilling, precast concrete manufacturing, encasements and beddings of water mains and sewers, manholes construction, non-load bearing walls, and farm-to-market roads. To achieve long-term economic and environmental sustainability, municipalities need to improve source segregation, handling, and storage practices to enhance the existing (45%) recycling rate to 100% in the next five years and approach the zero-waste scenario by 2030. The findings of the present study motivate the generators for source reduction as well as encourage the recycling companies and concerned organizations in the continuous performance improvement of the CDW management systems across Saudi Arabia on environmental grounds, as an addition to the perceived economic benefits.