The effects of zinc oxide (ZnO) on thermal and mechanical properties of recycled poly (ethylene terephthalate) (rPET) and recycled high density poly (ethylene) (rHDPE) were investigated. A blend of recycled polymer material is an interesting mixture of two polymers that are blended to create a new polymer material with different characteristics. The blend and composites with various amount of ZnO (0, 0.1, 0.3 and 0.5 phr) and 10 phr compatibilizer were prepared using a twin-screw extruder, followed by injection molding to prepare the test specimens. The mechanical properties were investigated through tensile and notched impact tests. The thermal properties were determined through thermogravimetric analyzer and differential scanning calorimetry. The incorporation of ZnO had no significant effect on the thermal stability of the rPET/rHDPE blend. However, ZnO functioned as a nucleating agent, enhancing the degree of crystallinity in rPET while delaying the crystallization of rHDPE. The addition of 0.5 phr ZnO significantly improved the Young’s modulus and impact strength of the blend, from 349 MPa to 1430 MPa and 56.6 J/m–111.9 J/m respectively. Conversely, the presence of ZnO led to a slight reduction in tensile strength and elongation at break, indicating a trade-off between mechanical reinforcement and flexibility.