Transforming hazardous and difficult-to-process waste materials, like spent Ni-MH batteries and aluminium foil, into nanocatalysts (NCts) provides a sustainable solution for resource management and reducing environmental impact. This study demonstrates a novel approach by extracting nickel sulfate (NiSO·HO) from battery waste and subsequently converting it into Ni(OH) hydrogel precursors using l-glutamic acid. Waste aluminium foil was processed into alumina (AlO), and combined with Ni(OH) to synthesize Ni/η-AlO NCts with 4% and 8% Ni loading. Characterization through XRD/SAED, STEM/EFTEM, and EELS revealed a disordered cubic structure of η-AlO, with well-dispersed Ni particles, making it effective for CO hydrogenation. The 8-Ni/η-AlO exhibited the best catalytic performance, with CH selectivity of 99.8% and space time yield (STY) of 80.3 mmol g h at 400 °C. The CO methanation mechanism over Ni/η-AlO NCts was further explored using DRIFTS aligned with GC + MS. The investigation suggested a preferential associative CO methanation pathway, involving sequential adsorption and hydrogenation of CO to hydrogen carbonates on Ni/η-AlO, and their transformation into formate and methoxy intermediates leading to methane. Finally, to complete the upcycling/recycling loop, the spent Ni/η-AlO NCts were recycled into Ni and Al precursors. These findings underscore the potential of upcycling waste materials for synthesizing sustainable, high-performance NCts, and offer insights into the CO methanation mechanism.