Increased market competition, rising environmental awareness, and dynamic market conditions necessitate the incorporation of concepts such as circular economy during new product development. The current study focuses on the development of a framework for the adoption of circular economy practices (CEPs) during agile new product development (ANPD) for performance improvement. The Pythagorean fuzzy analytical hierarchy process (Pythagorean fuzzy AHP) was used to compute the weights of the 17 identified CEPs, and the Pythagorean fuzzy combined compromise solution (Pythagorean fuzzy CoCoSo) method was used to prioritize the 13 identified performances. The data was collected from 12 experts of Indian manufacturing industries. The industrial expert panel was asked to provide their input in the form of a pairwise comparison matrix. The analysis of the results shows that the top three CEPs are the use of eco-friendly materials, design for the 6R principle, and use of renewable energy sources, whereas the top three performance metrics are the percentage use of eco-friendly materials, recycling rate, and percentage of products designed with the 6R principle. The study contributes to researchers in theoretical augmentation, industrial practitioners in implementation, and decision makers in adoption of CEPs.