Crushed stone extracted from natural sources is commonly utilized as railway ballast. Despite its effectiveness, its extraction process is environmentally destructive. In the twenty-first century, especially in civil Engineering projects, there is a growing emphasis on the judicious utilization of natural resources, prompting the exploration of alternative raw materials, particularly industrial by-products. The use of natural resources poses challenges both from environmental and economic perspectives. In this context, the current study explored the utilization of steel slag ballast (SSB) as an alternative to conventional granite ballast (GB) with an aim to reduce the burden on natural aggregate. Los Angeles Abrasion (LAA), impact, and large-scale direct shear tests were conducted on steel slag ballast (SSB) and granite ballast (GB) with and without tyre (waste tyre) chips. Test results indicate that SSB exhibited higher degree of resistance to abrasion and impact than conventional GB. Addition of tyre chips further reduces the abrasion and impact value both in case of SSB and GB. Direct shear test results indicate that irrespective of the proportion of tyre chips, SSB exhibited higher value of peak shear stress (τ), while exhibiting lower ballast breakage index (BBI). Moreover, addition of tyre chips reduces the value of τ and BBI both in case of SSB and GB. The optimal range of tyre chips to be mixed with SSB in order to have at least similar shear strength as that of granite ballast but with significantly lower particle breakage is determined to be 4.4–9.2%, depending upon the value of normal stress (σn).