Purpose <p>Mezcal is a distilled beverage from Mexico that produces 14 million liters annually. This work aims to evaluate the LCA of mezcal production in Oaxaca, Mexico, and identify the critical stages and environmentally assess the potential for waste recovery and reuse of vinasses treated by anaerobic digestion for irrigation of agave crops to reduce discharges into rivers and soils based on principles of circular economy combined with valorizing bagasse residues as a sustainability strategy, converting waste into a valuable resource minimizing environmental impact.</p> Methods <p>An attributional life cycle assessment method was applied to measure the environmental impacts of mezcal production. This evaluation selected the manufacture of a chipboard-type bagasse board and vinasse-treated irrigation as a waste valorization strategy. Due to the similarity in materials, technology, and applications, from waste collection to manufacturing, two types of waste panels — pine shavings and mezcal bagasse — were compared. The supply chain is considered from palenques in Oaxaca, Mexico, and the data serve as inputs for the analysis. The system boundaries encompassed the cradle-to-gate approach, and eight environmental impact categories were assessed using the ReCiPe model method to calculate the results of the midpoint impact categories. A sensitivity analysis was applied to evaluate the impact.</p> Results <p>Findings show that bagasse valorization significantly reduces environmental impacts: a 3% drop in global warming, a 99% reduction in freshwater and marine eutrophication, and a 43% cut in land use. Human carcinogenic toxicity also decreased by 4.6%. Repurposing production waste reduces toxicity, eutrophication, terrestrial ecotoxicity, and land use.</p> Conclusions <p>This study concludes that using mezcal bagasse to produce particle boards and treat vinasses can sustainably reduce the environmental impact of the mezcal and tequila industries. This approach minimizes soil and water contamination, promoting a more efficient production cycle that utilizes agricultural byproducts. These practices offer both economic and environmental benefits, aligning with the principles of a circular economy and supporting an industry that safeguards the natural environment.</p>