<p>The growing global focus on sustainable and energy-efficient construction has driven the need for innovative materials that address environmental concerns while enhancing building performance. In response, recent research has explored the utilization of industrial by-products to develop energy-efficient building materials, effectively integrating waste management with improved energy efficiency. Among these materials, Ground Granulated Blast Furnace Slag (GGBFS), a by-product of the iron and steel industry, has gained recognition for its superior engineering properties and environmental benefits. This study aims to develop energy-efficient building blocks incorporating GGBFS, with a density less than 1800&#xa0;kg/m³ and a compressive strength of 10&#xa0;MPa. The research begins by optimizing mix proportions to achieve an optimal balance of workability, mechanical strength, and durability. The thermal conductivity of the blocks was evaluated using the hot plate method to assess their insulating capabilities. Additionally, the energy-saving potential of GGBFS-based blocks was analysed through energy modelling of a library block using the eQUEST energy simulation software, considering different climatic zones in India. The findings indicate that GGBFS-based aerated concrete blocks can significantly reduce building energy consumption, providing substantial energy savings while maintaining structural integrity. eQUEST simulations confirm their potential for energy-efficient performance, reinforcing the viability of GGBFS as a sustainable construction material. This study highlights the transformative role of industrial by-products like GGBFS in advancing sustainable construction practices.</p> Graphical Abstract <p></p>