The rapid growth of the construction industry has exacerbated the challenges of managing construction waste and reducing reliance on virgin resources, particularly in developing nations such as Malaysia. Limited landfill capacity and increasing volumes of construction waste necessitate sustainable solutions that align with the circular economy and Sustainable Development Goals (SDGs). This study investigates the potential of using Recycled Concrete Aggregate (RCA) and Rice Husk Ash (RHA) to develop lightweight interlocking blocks as a sustainable alternative for non-load-bearing walls. The research was conducted in two phases: material preparation and performance evaluation. RCA was sourced from tested concrete cubes, and RHA was collected from rice mills. These materials were incorporated into foamed concrete mixtures and subjected to compressive strength, thermal conductivity, water absorption, and sound absorption tests. The results indicated an optimal mix of 10% RCA and 5% RHA, achieving a compressive strength of 2.73 MPa, which exceeds the JKR 2020 minimum requirement for non-load-bearing walls. Thermal conductivity tests indicated excellent insulation properties, with a heat flow rate of 0.392 W/mK, while the water absorption rate remained below the 10% threshold. Moreover, the sound absorption performance was enhanced at higher frequencies, making the blocks suitable for noise reduction applications. This study demonstrates that RCA and RHA can significantly reduce construction waste, enhance material sustainability, and decrease dependence on traditional resources. The findings underscore the viability of lightweight interlocking blocks in promoting resource reuse, reducing environmental impacts, and advancing cost-effective building practices. Future research can be focused on improving the cost-effectiveness of these materials and exploring the re-use of other waste materials.