Recycling medium-density fiberboards (MDF) presents notable technological challenges, primarily due to the deteriorated properties of the recycled wood fibers obtained from MDF waste. On the other hand, the enhanced valorization of recycled wood in the manufacturing of wood composites represents a viable approach for implementing the principles of a circular bio-economy in the wood-based panel industry and lowering its carbon footprint. This research aimed to investigate and evaluate the impact of the hydrothermal hydrolysis regime on the physical and mechanical properties of recycled MDF panels (rMDF). The hydrolysis temperature was varied from 121 °C (saturated steam pressure 0.2 MPa) to 134 °C (saturated steam pressure 0.3 MPa), and three hydrolysis durations, i.e., 30, 45, and 60 min, were applied. A control MDF panel, manufactured in laboratory conditions from industrial pulp, was used to perform the comparative analyses. It was observed that the degradation of the rMDF panels occurred when the hydrolysis temperature was increased from 121 °C to 134 °C. The research confirmed the deteriorated physical and mechanical properties of rMDF compared to the panels manufactured from natural wood fibers. Markedly, no significant differences were detected between the density profiles of the rMDF panels and the control boards fabricated from industrial pulp. As a result of the study, it was found that the hydrolysis temperature has a more significant effect than the processing time. It was also established that, in the preliminary preparation of the MDF panels into samples with dimensions similar to those of pulp chips, the optimal hydrolysis regime is at a temperature of 121° C (saturated steam pressure 0.2 MPa) and a time of 30 min.