Steel manufacturing industries produce huge amount of solid wastes that are generally disposed of for landfilling, creating health hazard and environmental problem. Thus, it is important for adaptation of industrial solid waste management in steel manufacturing sector for a sustainable solution and for creation of green environment. There is a possibility of using steel slag to be utilized in autoclave aerated concrete (AAC) blocks as a partial substitution of cement in response to a demanding sustainable solution. In this present study, the influence of partial substitution of cement with steel slag in autoclave aerated concrete (AAC) block is carried out. Using steel slag as partial substitution of cement not only reduces CO2 emissions but also addresses the issue of solid waste management. Literature survey demonstrated that the steel slag has certain binding properties and can be used to partially substitute cement in AAC that would not only reduce cost significantly but also contribute to the sustainable development. In the present study, partial substitution of cement by steel slag in AAC block by 0% by wt., 10% by wt., 20% by wt., 30% by wt., 40% by wt. and 50% by wt. was made by adopting standardized concrete testing procedures. A maximum increase of 32.4% in compressive strength was obtained in 30% by wt. substitution of cement by steel slag. The obtained results showed that steel slag can be utilized for substitution of cement as well as to contribute for sustainable development.