The concept of the circular economy has emerged as a promising solution to address the mounting concerns surrounding plastic waste and the urgent need for sustainable resource management. While conventional centralized recycling remains a common practice for plastic waste, centralized facilities may prove inadequate in handling the ever-increasing volumes of plastic waste generated globally. Consequently, exploring alternative recycling methods, such as distributed recycling by additive manufacturing, becomes paramount. This innovative approach encompasses actively involving communities in recycling practices and promotes a circular economy. This comprehensive review paper aims to explore the critical aspects necessary to realize the potential of distributed recycling by additive manufacturing. In this paper, our focus lies on proposing schemes that leverage existing literature to harness the potential of distributed recycling by additive manufacturing as an effective approach to plastic waste management. We explore the intricacies of the recycling process, optimize 3D printing parameters, address potential challenges, and evaluate the mechanical properties of recycled materials. Our investigation draws heavily from the literature of the last five years, as we conduct a thorough critical assessment of DRAM implementation and its influence on the properties of 3D printing structures. Through comprehensive analysis, we reveal the potential of recycled materials in delivering functional components, with insights into their performance, strengths, and weaknesses. This review serves as a comprehensive guide for those interested in embracing distributed recycling by additive manufacturing as a transformative approach to plastic recycling. By fostering community engagement, optimizing 3D printing processes, and incorporating suitable additives, it is possible to collectively contribute to a more sustainable future while combatting the plastic waste crisis. As progress is made, it becomes essential to further delve into the complexities of material behavior, recycling techniques, and the long-term durability of recycled 3D printed components. By addressing these challenges head-on, it is feasible to refine and advance distributed recycling by additive manufacturing as a viable pathway to minimize plastic waste, fostering a circular economy and cultivating a cleaner planet for generations to come.