This review tackles the challenges of worldwide waste management, focusing on renewable and sustainable fuels and waste recycling through the exploration of co‐pyrolysis as an innovative method. It explores the characteristics and environmental impact of municipal solid waste (MSW) and plastic waste (PW), delving into pyrolysis fundamentals, processes, and challenges. The primary emphasis is on co‐pyrolysis, elucidating its integration of municipal and plastic waste, synergistic effects, and advantages. The manuscript thoroughly analyzes reaction kinetics, thermodynamics, and the feasibility of co‐pyrolysis for energy recovery. It also delves into the synthesis of renewable fuels and valuable chemical intermediates, considering optimization of product distribution. Environmental and economic sustainability aspects, including impact assessment, greenhouse gas emissions, life cycle analysis, and cost analysis of co‐pyrolysis processes, are comprehensively investigated. The review underscores the economic benefits of renewable fuel and chemical materials synthesis. The conclusion addresses challenges, proposes future directions, outlines limitations, technical challenges, environmental considerations, and recommends further exploration and integration with other waste management techniques.