This research investigates epoxy resin composites reinforced with bagasse microfiber and custard apple husk biocarbon, with a focus on their mechanical properties, thermal stability, flammability, and water absorption. Epoxy resin, combined with 40 vol.% bagasse microfiber and varying levels of biocarbon content, forms composites designed to enhance strength, durability, and resistance for demanding applications. The custard apple husk biocarbon, derived through a multi-stage pyrolysis process, contributes to the composite’s improved thermal stability and reduced water absorption, making it suitable for industries such as shipping, automotive, aerospace, and infrastructure. Specimen EB2, which incorporates 3 vol.% biocarbon, exhibits exceptional mechanical properties, including a tensile strength of 145 MPa and a flexural strength of 160 MPa. These improvements are attributed to the ideal dispersion of biocarbon, which enhances load-bearing capacity and impact resistance. On the other hand, specimen EB3, with 5 vol.% biocarbon, demonstrates superior flame resistance, with the lowest flame propagation speed observed (5.44 mm/min), along with enhanced thermal stability (degradation temperature of 384 °C) and minimal water absorption (0.04%). The higher biocarbon content contributes to dense char formation, serving as a thermal and flame barrier, thus reducing the composite’s flammability. The stir casting fabrication method used in this study ensures an even distribution of fibers and fillers, leading to composites that outperform conventional materials in terms of strength and thermal endurance while maintaining a lightweight profile.