This study aims to develop a tough-hard (LCS/WC-Co) bilayer composite using recycled low-carbon steel (LCS) with WC–Co through conventional powder metallurgy (PM), offering a cost-effective and sustainable route to enhance mechanical performance. Processing parameters like sintering temperature, compaction pressure, and particle size, were optimized to control microstructural development and mechanical behavior. The microstructure results show that the defect-free interfaces, dense layer and strong interfacial bonding strength are achieved at the optimal parameters of 1300 °C, 313 MPa, and 25 μm particle size. Lower sintering temperatures (< 1280 °C) produced porosity and weak adhesion, whereas sintering above 1320 °C led to interfacial cracking. At the interface, mutual diffusion occurred with Fe diffusion into WC–Co and Co migrating into LCS. Concurrently, WC decomposition facilitated the formation of Fe(W) and CoFe intermetallic, together with minor Co₃W₃C and Fe₃W₃C phases. These interfacial reactions provided strong cohesion and enhanced mechanical performance, yielding compressive and tensile interfacial bonding strength of 209 MPa and 44 MPa, with hardness of 150 ± 6 HV for the LCS layer and 660 ± 70 HV for the WC–Co layer.