The main objective of this research is to produce an eco-friendly and sustainable construction material using industrial effluent slag sand made from the steel industry. The scarcity of river sand and the depletion of natural resources like rock particles over time have led to using industrial by-products instead of dumping them, leading to environmental pollution. Hence, an attempt is made to replace the river sand with slag sand in various percentages in the preparation of 1:3 grade cement mortar, and its properties are studied with different curing ages. Mortar specimens are cast by considering slag sand in the ratio 0–100 with an increment of 25% replacement for studying compressive strength and UPV at various curing ages. Microstructure structure tests revealed the dense formation of CSH and CAH and the presence of silicon, carbonate, and aluminum bonds that enhance the strength of mortar at 50% replacement of slag sand. Meanwhile, authors evaluated the cost analysis for preparing conventional mortar with slag sand, which minimized the cost of production with the advantage of reducing the disposal challenge. Also, the effect of slag sand in mortar has significant embodied energy and carbon footprint on the climatic condition compared to conventional mix. Thus, slag sand can be used as an alternative for fine aggregate and, more appropriately, for replacing cement rich in calcium content in developing sustainable mortar.