Low-temperature cracking is one of the major pavement distresses in cold regions. To reduce the prevalence of such cracks, crumb rubber modified asphalt (CRMA) has been applied for a long time. However, CRMA experiences compatibility and segregation problems with asphalt. Silicone oil has long been seen to improve compatibility and segregation problems of polymers in asphalt, but its benefits on low temperature performance of crumb rubber asphalt have not been explored. Furthermore, silicone oil can be obtained as virgin or recycled from industrial transformers; however, the recycled silicone oil’s influence on low-temperature crack performance of asphalt has also not been explored. Therefore, the purpose of this study was to investigate the effect of recycled silicone oil (SO) on dispersion and low-temperature fracture performance of crumb rubber asphalt. The fracture mechanics-based single-edge notch beam (SENB) test was performed at temperatures of −12°C, −18°C, and −24°C. In addition, fluorescence microscopy (FM), atomic force microscopy (AFM), and Fourier-transform infrared (FTIR) experiments were also conducted. Results show that the addition of SO to CRMA increases displacement, fracture energy, and fracture toughness at low temperature while it decreases stiffness which reduces cracking. In addition, AFM results show that surface roughness increases with the addition of SO which indicates that bonding of asphalt and rubber particles had also improved. FM also confirmed that dispersion of rubber particles had improved with addition of silicone oil. FTIR results revealed that asphalt samples with SO treatment were hydrophobic which potentially repels water ingress and delays the freezing of asphalt. Lastly, statistical analysis revealed that the influence of silicone oil on low-temperature performance of rubber asphalt was significant. Therefore, the study concluded that fracture cracking resistance is improved by addition of silicone oil to crumb rubber asphalt.