The development of sustainable biomass resources is key to achieving “dual carbon” goals. Waste wood powder, a by-product of traditional wood processing, is often discarded due to its complex structure, leading to resource waste and pollution. In this study, a lithium bromide (∼ 60 wt%) system was used to dissolve and regenerate waste wood powder into three cellulose hydrogels without prior removal of hemicellulose and lignin: OWP-RC, RC, and P-RC. To uncover the mechanisms of dissolution and regeneration, various characterization methods were used to compare regenerated cellulose with the original fibers, at scales ranging from macroscopic to molecular. During dissolution, cellulose reached nanoscale dispersion. The dissolution–regeneration process transformed the cellulose from type I to type II, which exhibited decreased crystallinity and thermal stability. However, the presence of organic powder in OWP-RC improved properties, including crystallinity (27.43 %) and thermal stability. Additionally, the potential for cellulose solution as a medium for integrating other types of waste powders was investigated. Waste wood powder, elemental powders, and compound powders were successfully incorporated into cellulose solutions to facilitate fibration of materials without phase separation. The fibrillated powder composite hydrogels exhibited an increase in compressive strength by 1.8 times and reached a biodegradation rate of 99.15 % under enzymatic conditions. The dissolution–regeneration process yielded a lignin-rich by-product (∼ 54 % of the residue), which can be reused. This work offers an efficient green method for upcycling waste powders and developing functional regenerated cellulose composites.