This study investigates the effect of gadolinium (0.1-0.8 wt.%) on the solidification behaviour, microstructure, mechanical properties, and tribological performance of a recycled Al-0.5Fe-0.5Si alloy. Thermal analysis reveals that Gd addition transforms the solidification path from two phases (α-Al and Al₃Fe) in the base alloy to four phases, including the newly formed Al₃Gd and Al₃(Fe,Gd,Si). XRD and SEM-EDS jointly confirm the precipitation of these Gd-containing intermetallics. Microstructural analysis reveals progressive grain refinement, reaching approximately a 60% reduction at 0.8 wt.% Gd — consistent with extended dendrite coherency time. Mechanical testing demonstrates significant improvements: +14% in ultimate tensile strength, +29% in hardness, with only a moderate reduction in ductility. Tribological performance is also enhanced, with a 45% reduction in coefficient of friction and a 31% decrease in wear rate. These enhancements are attributed to grain refinement and precipitation of hard Gd-intermetallics, which hinder dislocation motion and reduce adhesive wear.