This study investigates the potential of a blended binder formulated from two industrial solid wastes viz. phosphogypsum and fly ash in combination with lime. Three mix proportions of phosphogypsum and fly ash were investigated, and the minimum lime contents required for activation were determined using the Eades and Grim pH test. The lime–fly ash–phosphogypsum blends were then cast into cubes, both in their paste form as well as mortar form, mixed with sand in the ratio of 1:3. They were cured for a period of seven days, and afterwards, their compressive strength was determined. Ordinary Portland cement and lime mortar blocks were also cast as control specimens for comparative evaluation of the strength. The optimal lime–fly ash–phosphogypsum blend was identified and used to construct a masonry prism, and the strengths of the masonry prisms were also evaluated. The optimal lime–fly ash–phosphogypsum blend mortar was also subjected to an X-ray diffraction analysis to determine the reaction products formed during hydration. The study revealed that 5% lime mixed with fly ash:phosphogypsum in the ratio of 3:1 was the optimal proportion which gave the maximum strength to the cubes. The optimal lime–fly ash–phosphogypsum blend mortar developed strength that was higher than conventional Portland cement and lime mortar. The optimal lime–fly ash–phosphogypsum blend mortar masonry prisms developed strength that was comparable to that of Portland cement mortar masonry. The X-ray diffraction analysis revealed the formation of calcium silicate hydrate minerals as well as ettringite and portlandite which were responsible for strength gain.