Insoluble rust waste from the scraping of rusted iron-containing materials represents a cheap, eco-friendly, and available source of iron. LaFeO3 perovskite-type powders were successfully prepared by solution combustion synthesis using rust waste from an electricity transmission tower manufacturer. Solution combustion synthesis enabled introduction of this insoluble iron precursor directly into the final product, bypassing complex extraction procedures. Catalytic activity in the propylene oxidation of the waste-derived LaFeO3 with stoichiometric Fe/La ratio was almost identical to the commercial iron nitrate-derived LaFeO3, thus demonstrating the viability of this recycling solution. The amount of waste iron precursor was varied and its effect on the powder properties was investigated. A lesser stoichiometric amount of precursor produced a LaFeO3-La2O3 binary system, whereas a higher stoichiometric amount led to a LaFeO3-Fe2O3 binary system. Catalytic activity of iron-rich compositions in the propylene oxidation was only slightly lower than the stoichiometric one, whereas iron-poor compositions were much less active. This eco-friendly methodology can be easily extended to other iron perovskites with different chemical compositions and to other iron-containing compounds.