Waste recycling is one of the key aspects in current day studies to boost the country’s circular economy. Recycling wood from construction and demolished structures and combining it with plastics forms wood-polymer composites (WPC) which have a very wide scope of usage. Such recycled composites have very low environmental impact in terms of abiotic potential, global warming potential, and greenhouse potential. Processing of WPCs can be easily done with predetermined strength values that correspond to its end application. Yet, the usage of conventional polymer composite manufacturing techniques such as injection molding and extrusion has very limited scope. Many rheological characterization techniques are being followed to evaluate the influence of formulation and process parameters over the quality of final WPCs. It will be very much interesting to carry out a review on the material formulation of WPCs and additives used. Manufacturing of wood composites can also be made by using bio-based adhesives such as lignin, tannin, and so on. Nuances in complete replacement of synthetic adhesives as bio-based adhesives are also discussed by various researchers which can be done only by complete understanding of formulating factors of bio-based adhesives. Wood composites play a significant role in many non-structural and structural applications such as construction, floorings, windows, and door panels. The current review focuses on the processing of WPCs along with additives such as wood flour and various properties of WPCs such as mechanical, structural, and morphological properties. Applications of wood-based composites in various sectors such as automotive, marine, defense, and structural applications are also highlighted in this review.