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An innovative and environmentally sustainable approach is presented for the synthesis of cadmium oxide nanoparticles (CdONPs), leveraging the leaf extract of the pigeon pea plant (Cajanus cajan) as both reductive and capping agents. This environmentally friendly heterogeneous CdONPs was meticulously characterized through FT‐IR, PXRD, HR‐TEM, SEM‐EDAX, XPS and UV‐Vis spectroscopic analyses. These NPs were subsequently applied to facilitate the three‐component Biginelli reaction using ethyl acetoacetate, urea, and substituted benzaldehydes for producing dihydropyrimidone derivatives in good to excellent yield. The methodology was tested for different aldehydes containing electron‐withdrawing and electron‐donating groups. The catalyst demonstrated consistent performance over approximately five cycles, exhibiting negligible loss in yield and catalytic potential. The proposed mechanistic pathway of the reaction was elucidated through intermediate mass analysis and further validated by Density Functional Theory (DFT) calculations and catalytic surface adsorption studies. [ABSTRACT FROM AUTHOR]