An increased amount of textile waste will be available in the future, and its utilization requires attention from various perspectives. The re-utilization of textile waste in a second material cycle is an option for dealing with a global problem that puts stress on the urban environment. In this study, almost 30 kg of clothing were recycled as a raw material in the structure of a composite, whose structural properties were analyzed. The studied materials were made from high-density polyethylene (HDPE), anhydride modified polyethylene, lubricant, and either polyethylene terephthalate (PET) or rayon fibers from recycled clothes. The recycled clothes were identified by a near-infrared (NIR) analyzer, followed by treatment of size reduction and materials compounding by agglomeration and compression molding technologies. The material properties were characterized by thickness swelling, water absorption, impact, and tensile testing. The recycled clothes fibers, acting as a filler component in the structure of the composite, could maintain the properties of the material at the same level as the reference material. PET fibers being used as a component resulted in a significant improvement in impact strength. The study showed that recycled clothes can be re-utilized as a substitute for raw materials, and can be part of a solution for future challenges involving textile waste, following the principles of the circular economy. Textile recycling create opportunities to improve the quality of urban life.