An increasing rate of urbanization, lack of knowledge, low willingness to pay for sustainable waste management, and absence of legal landfills inhibit the rate at which Circular Economy (CE) is implemented. The successful CE adoption for construction and demolition waste (CE-CDW) involves navigating a complex tapestry of interconnected factors that enable or inhibit CE-CDW success. We used a participatory system thinking and modeling approach to analyze the interaction of inhibiting factors that impact CE-CDW in Aysén, Chile. Barriers to CE-CDW were identified in the literature and modeled in a workshop with experts from different areas of construction industry, policy, and academia. The emerging CE-CDW system model was analyzed using structural factor and network analysis techniques to identify leverage points for policy and practice. Findings pointed to limited strategic vision of policy and regulation as a key barrier impacting the necessary financial and technical elements needed to implement and scale-up CE-CDW.