Purpose <p>An industrial by-product-based binder (HSC) composed of hemihydrate phosphogypsum (HPG), slag (SL), and a small amount of cement clinker (CC) was employed to stabilize high-water content coastal soft soils (CS). A series of tests and microstructural analyses were conducted to investigate the strength development and associated micro-mechanisms of HSC-stabilized soils (HSCS).</p> Methods <p>Unconfined compressive strength (UCS) tests were conducted to investigate the strength development of HSCS considering the effects of HPG, SL, and CC contents. In addition, the ability to resist deformation (ARD) and economic performance were evaluated to assess the stabilization effectiveness. X-ray diffraction (XRD) and scanning electron microscopy (SEM) analyses were conducted to investigate the micro-mechanisms of HSCS strength development. Long-term durability and environmental safety assessments were conducted to evaluate the practical applicability of HSCS.</p> Results <p>The results show that HSC improved the stabilization performance of HSCS, with the optimal HPG: SL: CC ratio determined as 40:48:12. Compared with soil treated with ordinary Portland cement (OPCS), the unconfined compressive strength (UCS) increased by approximately 50%, while the ability to resist deformation (ARD) increased by about 20%. Meanwhile, the material cost was reduced to approximately 40–50% of that of OPC stabilization. Microstructural analyses revealed that C-S-H gel and ettringite were mainly responsible for the strength development of HSCS. In addition, HSCS exhibited satisfactory durability performance and environmental safety under freeze-thaw, sulfate immersion, water immersion, and SPLP tests.</p> Conclusions <p>The industrial by-product-based binder HSC provides an effective and low-carbon alternative for the stabilization of coastal soft soils.</p>