Abstract: Residual film can be recycled by the water-washing and melt granulation equipment in modern agriculture. However, three challenges have severely restricted its application in the arid and semi-arid agricultural regions of Northwest China, such as the high energy consumption, substantial water requirements, and a significant tendency to generate microplastic pollution. Particularly, the water resources are scarce in the sustainable environment, such as Xinjiang. In this research, a dry granulation device was specifically developed to process the residual film after dry cleaning. Existing water-based systems were also incorporated to effectively treat the dry-cleaned residual film, according to the unique material properties. Theoretical analysis was also integrated with the experimental validation. A systematic optimization was performed on the structural parameters using engineering calculations and iterations. Key components were then optimized, including the granulation barrel, rotating moving blade assembly, and stationary fixed blade system. The influencing factors on the equipment performance were also identified using kinematic and mechanical analysis of the granulation. Their operational ranges were precisely determined using advanced analytical and experimental data. Numerical simulations were conducted to verify the structural and functional performance. Experimental verification was performed on the film feeding dynamics and the particle mixing behavior under various conditions. Three parameters were taken as the test factors: rotational speed of the moving blade, wedge angle of the fixed blade, and the length of the upper end of the stirring blade. The residual film feeding rate and granulation efficiency were selected as the primary evaluation indicators to assess the performance. A single-factor test was carried out to determine the preliminary parameter ranges. The testing efficiency was optimized to reduce the overall experimental costs. Subsequently, the response surface method (RSM) was also implemented to explore the relationships between the parameters and performance indicators. Accurate regression models were obtained after multivariate regression and optimization. The optimal combination of the parameters was determined to be: the rotating blade speed of 754.5 r/min, fixed blade wedge angle of 39.57°, and upper stirring blade length of 97.2 mm. The remarkable performance was then achieved with a film feeding rate of 92.77% and a granulation rate of 95.56%, indicating the excellent processing. Prototype tests were also conducted with the parameters of 755 r/min blade speed, 40° wedge angle, and 97 mm stirring blade length, in order to accommodate the manufacturing tolerances during operation. The results demonstrated that there was outstanding performance with the average feeding and granulation rates of 91.71% and 94.16%, respectively. The minimal deviations of only 1.06 and 1.40 percentage points from the theoretical predictions indicate the high accuracy and reliability of the improved models. Consequently, the dry granulation effectively eliminated the water consumption and energy requirements, thus providing a practical and efficient technical solution to the residual film accumulation in Northwestern regions. Secondary microplastic pollution was also prevented in the conventional water-based systems. A sustainable and environmentally responsible approach was offered to manage the agricultural plastic wastes under the water-sensitive environments, in order to promote the advanced agricultural practices in dryland farming regions. Sustainable waste management can greatly contribute to the circular economy in agricultural production.