Construction and demolition waste material is of great potential for use in pavement engineering. This paper aims to investigate the feasibility of ceramic waste aggregate (CA) used in cooling asphalt pavement through a series of test methods and simulation techniques. Stone mastic asphalt (SMA) containing 10%, 20%, 30%, 40%, and 50% coarse ceramic waste aggregate (CASMAs) was first designed using the Marshall method. Afterward, the road performance and thermal insulation performance of the five different CASMAs were assessed by a comprehensive lab test, including a wheel rutting test, moisture susceptibility test, bending beam test, fatigue beam test, and indoor thermal insulation test. Finally, a 2D finite-element (FE) model was developed to investigate the transient thermal field and rutting deformation response of the cooling asphalt pavement with CASMAs. Results show that CASMAs experienced degradation of rutting resistance, moisture susceptibility, and anti-cracking performance while still meeting technical requirements with CA content of up to 40%. On the other hand, CASMAs can cool the pavement’s temperature by 11.5 °C at the bottom of asphalt layers. The permanent rutting deformation of cooling asphalt pavement was 45.36% smaller than that of conventional asphalt pavement without CASMAs. Based on the test results and numerical simulation results, the optimum content of ceramic waste aggregate in stone mastic asphalt was recommended as 40%.