This paper investigated the stability, mechanical properties, and the microstructure of wood-plastic composites, which were made using either recycled or virgin high-density polyethylene (HDPE) with wood flour (Pinus radiata) as filler. The post-consumer HDPE was collected from plastics recycling plant and sawdust was obtained from a local sawmill. Composite panels were made from recycled HDPE through hot-press moulding exhibited excellent dimensional stability as compared to that made from virgin HDPE. The tensile and flexural properties of the composites based on recycled HDPE were equivalent to those based on virgin HDPE. Adding maleated polypropylene (MAPP) by 3-5 wt% in the composite formulation significantly improved both the stability and mechanical properties. Microstructure analysis of the fractured surfaces of MAPP modified composites confirmed improved interfacial bonding. Dimensional stability and strength properties of the composites can be improved by increasing the polymer content or by addition of coupling agent. This project has shown that the composites treated with coupling agents will be desirable as building materials due to their improved stability and strength properties.