Rapid urbanization and intensive infrastructure development in Nepal have resulted in a significant surge of construction and demolition waste (CDW), traditionally managed through environmentally detrimental disposal practices. This research evaluates the mechanical performance and feasibility of utilizing crushed demolition waste as a sustainable coarse aggregate substitute in M20 grade concrete. The primary objective is to evaluate the influence of varying replacement levels of Recycled Concrete Aggregates (RCA) on the structural integrity and workability of concrete. The methodology involved sourcing CDW from ten demolition sites in Birendranagar, Surkhet, and processing it into RCA through systematic crushing and screening. Five concrete mixes were designed according to IS 10262:2019, with replacement ratios of 0%, 25%, 50%, 75%, and 100%. Results demonstrate that while RCA exhibits a water absorption rate 462.5% higher than natural aggregates, replacement levels up to 50% successfully achieved a 28-day compressive strength of 25.0 MPa, satisfying M20 structural requirements. However, beyond this threshold, a marked decline in slump and density was observed, leading to a downgrade in concrete classification. The study concludes that a 25–50% replacement ratio offers an optimal mechanical profile for structural applications, effectively promoting the circular economy. This approach provides a technically viable alternative to virgin aggregates and mitigates the ecological impact of riverbed mining and uncontrolled waste dumping in the Himalayan region.