In this work, recycled high density polyethylene (rHDPE) was compounded with regenerated tire rubber (RR) (35–80 wt.%) and reinforced with recycled tire textile fiber (RTF) (20 wt.%) as a first step. The materials were compounded by melt extrusion, injection molded, and characterized in terms of morphological, mechanical, physical, and thermal properties. Although, replacement of the rubber phase with RTF compensated for tensile/flexural moduli losses of rHDPE/RR/RTF blends because of the more rigid nature of fibers increasing the composites stiffness, the impact strength substantially decreased. So, a new approach is proposed for impact modification by adding a blend of maleic anhydride grafted polyethylene (MAPE)/RR (70/30) into a fiber-reinforced rubberized composite. As in this case, a more homogeneous distribution of the fillers was observed due to better compatibility between MAPE, rHDPE, and RR. The tensile properties were improved as the elongation at break increased up to 173% because of better interfacial adhesion. Impact modification of the resulting thermoplastic elastomer (TPE) composites based on rHDPE/(RR/MAPE)/RTF was successfully performed (improved toughness by 60%) via encapsulation of the rubber phase by MAPE forming a thick/soft interphase decreasing interfacial stress concentration slowing down fracture. Finally, the thermal stability of rubberized fiber-reinforced TPE also revealed the positive effect of MAPE addition on molecular entanglements and strong bonding yielding lower weight loss, while the microstructure and crystallinity degree did not significantly change up to 60 wt.% RR/MAPE (70/30).