Fly ash belite cement (FABC) is predominantly composed of α′L-C2S and C12A7. It is prepared from low-grade fly ashes by hydrothermal synthesis and low-temperature calcination methods. The formation, evolution process, and microstructure of FABC hydration productions were studied in this work, and the ultimate aim is to give a theoretical foundation and technological support for the application of the new cementitious material made of low-quality fly ash. The results showed that the optimal amount of gypsum was about 7% of cement by weight. The 3-day and 28-day compressive strength of cement pastes with 7% gypsum was 13.6 and 60.2 MPa, respectively. Meanwhile, the 28-day flexural and compressive strengths of mortars with 7% gypsum were 4.6 and 25.9 MPa, respectively. The early hydration heat release rate of this low-temperature calcined cement was higher compared with that of high-temperature calcined cement as Portland cement. FABC hydration pastes contained mostly C-S-H, ettringite (AFt), unreacted mullite, and quartz. It was significantly different from Portland cement in that no calcium hydroxide [Ca(OH)2] was observed in the hydration products of different ages because all Ca(OH)2 formed in the hydration reaction could react completely to generate AFt. The ratio of harmful pores (d ≥ 50 nm) reached 55.04% after 3-day hydration. However, it decreased to 6.71%, which was lower than that of Portland cement pastes (35.72%) after 28-day hydration. In the later hydration period from 3 to 28 days, the strength developed rapidly, and a compact microstructure appeared in the hardened paste due to the presence of pores less than 20 nm in diameter.