<p>This paper investigates the feasibility of exploiting paper sludge (PS) waste as partial cement replacement. Initially, PS was subjected to treatment by calcination to obtain paper sludge ash (PSA) followed by physical and chemical characterization. The influence of PSA inclusion at various cement replacement levels (5, 10, and 15% by weight) on cement properties was initially assessed. Next, the fresh properties, mechanical strengths, water transport, sulfate resistance, and drying shrinkage of blended cement mortars were observed and evaluated. Finally, the microstructure of selected blended cement pastes was observed through SEM–EDS, XRD, and TGA analysis. It was confirmed that using up to 15% of PSA complies with BS EN 196–3 requirements. The results also demonstrated that incorporation of up to 10% PSA was favourable as it has minimal influence on the consistency, early and late age, as well as residual strengths. Meanwhile, the filler effect of PSA imparted an improvement in drying shrinkage (&gt; 7%), sulfate resistance (− 40%) as well as sorptivity when 5–10% of cement was replaced with PSA. While slight changes were observed from the diffractogram, both SEM–EDS and TGA–DSC analysis suggested that limited hydration occurred, hence PSA filler effect is more dominant. Overall, this study suggests limiting PSA incorporation in blended cement mortar mixtures up to 10% to attain adequate performance. Consequently, an eco-friendly blended cement can be produced with reduced cement usage while valorising waste streams from the paper industry simultaneously.</p> Graphical abstract <p></p>