Disposable polyethylene (PE) products are notoriously difficult to recycle, leading to their global accumulation and severe environmental degradation. Hydrothermal liquefaction (HTL) is an efficient thermochemical conversion technology that can upcycle waste PE into high-value liquid fuels, offering immense potential for plastic waste valorization. In this study, commercial plastic bags and cling film, which represent two of the most ubiquitous types of non-recyclable post-consumer PE waste, were employed as experimental feedstocks. HTL experiments were conducted over a temperature range of 300–500 °C with a fixed residence time of 0.5 h, and the resulting products were comprehensively characterized. The experimental results show that reaction temperature exerts a profound influence on product yields. The optimal temperature for oil production was identified as 450 °C, at which the oil yields from plastic bags and cling film reached 43.3% and 36.0%, respectively. Composition analysis reveals that the derived oil consists predominantly of long-chain n-alkanes and α-olefins ranging from C13 to C27. Notably, water in the reaction system serves not only as a solvent and reaction medium but also as an active reactant, introducing oxygen-containing functional groups into the oil products. Furthermore, density functional theory calculations were performed to elucidate the microscopic reaction mechanism. The bond dissociation enthalpies of the main-chain C–C bonds in PE range from 86.7 to 91.9 kcal·mol-1, which are significantly lower than those of the C–H bonds (98.5–102.8 kcal·mol-1), confirming that C–C bonds cleave preferentially under hydrothermal conditions. Concurrently, analyses of molecular charge distribution, frontier molecular orbitals, and electrostatic potential reveal that PE possesses a uniform electronic structure and a large HOMO–LUMO energy gap of 9.585 eV. These intrinsic properties dictate that PE macromolecules degrade predominantly via a random free-radical chain scission pathway. This study systematically elucidates the product distributions, compositional characteristics, and microscopic degradation pathways of commercial PE waste during HTL, guiding the fuel-oriented utilization of non-recyclable plastic wastes.