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In the production of natural sausage casings, three layers of serosa, muscular, and mucosa are removed from gastro-intestinal wall of sheep as waste materials. The submocusa layer is taken for further processing. There is no report about generating added value out of these wastes. In this study, a novel approach was introduced for bioconversion of waste gastro-intestinal wall (WGW) to a value-added product. Alkaline hydrolysis of WGW was investigated and the hydrolysate was utilized for cultivation of Dunaliella salina, a value-added biomass. The hydrolysate that contained the highest total soluble protein was used for three sets of cultivations on different medium compositions, i.e., (1) cultivations on the modified Johnson’s medium enriched with different percentage of hydrolysate (0.5, 1, 2.5, 5, and 10 (%v/v)), (2) cultivations on modified Johnson’s medium which was free of nitrogen and carbon sources and enriched with different percentage of hydrolysate (0.5, 1, 2.5, 5, and 10 (%v/v), and (3) cultivation on modified Johnson’s medium which was free of nitrogen source and enriched with 2.5% hydrolysate. The results showed that WGW contained 60.7, 8.4, 15.8, and 15.2% protein, lipid, moisture, and ash, respectively and the enrichment of the medium with the hydrolysate (2.5%) increased biomass productivity by 20%. Additionally, substitution of 2.5% hydrolysate for nitrogen source (KNO3) resulted in the same biomass productivity. The results of this study revealed the potential of the hydrolysate as an alternative for KNO3 in cultivation of D. salina. Overall, this work proposed a novel approach for converting waste gastro-intestinal wall to value.