Extending the theoretical frameworks of empowerment, design thinking, and Biggs' Presage-Process-Product (3P) model to multidisciplinary inclusive education, this study examines the relationship between the learning outcomes of inclusive project-based learning (PBL) and its impact on young learners' psychological empowerment (PE), learning motivation (LE) and sense of alienation (AL). Quantitative research results demonstrate that participatory PBL can contribute to inclusive education and empower the socioeconomic disadvantaged community in the process. The target group--young learners aged 6-12 years old living in sub-divided flats--perceived their learning more positively and showed a reduced sense of psychological alienation after the engagement in participatory design on their home learning environment. Ninety per cent of participants agreed that the participatory programme has improved the living and learning environment; 87.8% of them assented that their overall efficiency of studying and learning has improved. The findings confirmed that participatory design experiences have significant positive impacts on participants' PE and LE, whilst alleviating AL. This research adds knowledge to literature related to holistic competency development, PBL, and design thinking in inclusive education.