Food waste constitutes a significant environmental and socio-economic challenge, particularly in rapidly urbanizing regions such as Semarang, Indonesia. Conventional food waste management practices primarily landfilling and incineration are increasingly regarded as unsustainable due to their contribution to greenhouse gas emissions, soil degradation, and limited resource recovery. This study aims to assess and compare the environmental and economic performance of two alternative waste treatment strategies: Black Soldier Fly (BSF) bioconversion and traditional composting. A Life Cycle Assessment (LCA) was conducted using a cradle-to-gate system boundary and a functional unit of 1 metric ton of food waste, evaluating impact categories including global warming potential (GWP), eutrophication, acidification, and human toxicity. The analysis revealed that BSF treatment significantly outperforms composting in terms of environmental impact. Specifically, the global warming potential associated with BSF treatment was estimated at 30.61 kg CO₂-eq/t, compared to 490.3 kg CO₂-eq/t for composting. Similar reductions were observed across all other impact categories. An accompanying Life Cycle Cost (LCC) analysis demonstrated that the BSF-based system is economically advantageous, with estimated potential revenues reaching USD 733.45 per ton, derived from the sale of larvae (as animal feed) and frass (as biofertilizer). This research is constrained by the use of modeled scenarios based on localized experimental data, and does not yet incorporate dynamic operational variables or social acceptance considerations. Nevertheless, the findings provide robust evidence for the environmental and economic feasibility of BSF-based food waste treatment in urban contexts. The originality of this study lies in its application of an integrated LCA–LCC framework to evaluate insect-based waste valorization in a tropical, developing-country setting. The results offer valuable insights for municipal authorities and policymakers aiming to implement circular economy principles in sustainable urban waste management.