The effect of palm kernel shell on the microstructure and mechanical properties of recycled polyethylene (RLDPE) reinforced with palm kernel shell particulate composite was evaluated to assess the possibility of using it as a new material for engineering applications. The composites were produced by compounding and compressive moulding technique by varying the Palm kernel shell particle from 5 - 25 vol% with particles size of 150, 300 and 400 µm. The microstructure (SEM/EDS) and the mechanical properties of the composites were investigated. The hardness of the composite increases with increase in palm kernel shell content and the tensile strength of the composite increased to optimum of 5 vol%. Scanning electron Microscopy (SEM) of the composites surfaces indicates fairly interfacial interaction between the palm kernel shell particles and the RLDPE matrix. The composites produced with 150 µm particle size have the best properties of the entire grade. Hence this grade can be use for interior applications such as car seat, dash board, and car interior for decorative purposes or other interior parts of automobile where high strength is not considered a critical requirement.