In the present paper, waste fibre reinforced composite panels have been developed for application in interior partition walls of buildings. These panels were produced using waste fibres collected from the textile industries and using aminoplastic phenol-formaldehyde resin. Mechanical properties such as tensile, compression and flexural properties of these composite panels were characterized and the influence of a few parameters such as fibre or matrix weight % and composite density on the mechanical properties has been analyzed. Impact properties (soft body and hard body impact), which is very important for the materials used in the partition walls, of the developed composite panels was simulated using finite element method and the influence of composite parameters (fibre or resin content, composite density) on the impact resistance and strain energy was analyzed. Thermal degradation behaviour of the developed composite panels was also investigated. Although the waste fibre reinforced composites show low mechanical properties, the simulation results showed that the composite panels showed required impact properties (no collapse, no penetration or projection under both soft and hard body impact) for their successful application in the interior partition walls. Thermal stability of the composite panels was also sufficient for this application. It was also observed that the composite panels exhibited better impact resistance and lower deformation when produced with higher fibre % as well as higher density.