The aim of this research is to study the feasibility of recovering waste engine oil (WEO) into diesel-like fuel using a novel two-stage reactor. The system increases the oil yield and quality, representing a considerable progress in hazardous waste management. The study examines optimal process conditions, including pyrolysis and distillation temperatures, carrier gas flow rates, and the effects of three catalysts: Fe2O3, Na2CO3, and bentonite. The results show that the temperature directly affects the pyrolysis process, with thermal cracking being the main reaction. Increasing the carrier gas flow rate improves the heat transfer capacity of the feed oil, thereby enhancing oil breakdown in the reaction. The optimal conditions for producing pyrolysis oil were determined as a pyrolysis temperature of 400 degrees C, a distillation temperature of 250 degrees C, and a carrier gas flow rate of 30 mL/min. Under these conditions, the produced pyrolysis oil had the highest combined composition of naphtha, kerosene, and gas oil, with its specific gravity and viscosity falling within the diesel standards range, although the flash point remained below the standards. Under the examined catalysts, Na2CO3 preferentially reacted with large hydrocarbon molecules, resulting in pyrolysis oil with heavy oil content. The use of Fe2O3 significantly reduced the sulfur content in the oil, while bentonite had a greater selectivity for naphtha. The study particularly shows the integration of re-distillation as an additional refining step, which has successfully improved the flash point to meet diesel fuel standards. These results demonstrate the potential of this approach to recycle hazardous waste into valuable fuel products.