Recycled fine (RF), a by-product of construction and demolition (C&D) waste, has limited application in cementitious materials due to its coarse particle size and low reactivity. This study investigates the effect of RF fineness on the fresh, mechanical, durability, and environmental properties of mortar. Mortar mixtures were prepared by replacing 25% of the cement with RF ground for 30, 60, and 90 minutes. To evaluate the influence of RF fineness, fresh properties were assessed through flow table tests, while hardened properties were examined using compressive and flexural strength tests at 28 days, rapid chloride migration tests for durability, and hardened density measurements. SEM and XRD analyses were conducted to characterize the morphology and mineralogical composition of RF, while an environmental assessment quantified CO₂ emissions. The results demonstrate that increasing RF fineness enhances its reactivity and filler effect, leading to a 13–23% reduction in compressive strength losses and a 20% decrease in the chloride migration coefficient, indicating an improved microstructure with increased fineness. SEM analysis confirmed that finer RF exhibits a more uniform and less angular morphology, which enhances its interaction with cement hydration products. Additionally, the need for superplasticizer decreased as RF fineness increased due to morphological improvements. The environmental assessment showed that RF utilization reduced CO₂ emissions by 23% per cubic meter, highlighting its potential as a sustainable alternative in cementitious materials. Strength efficiency analysis indicated that finely ground RF can maintain an optimal balance between mechanical performance and environmental impact. These findings suggest that finely ground RF can improve mechanical and durability properties while reducing environmental impact.