Water treatment sludge (WTS) is produced daily and disposed as hazardous material. It would be advisable to use locally available waste products as supplementary cementitious materials that ensures to be disposed of without harming the environment. As novelty, this research investigated the potential of using recycled-WTS with fly ash (FA) and ground-granulated blast furnace slag (BFS) as ternary blended binders. Thus, it can provide an economical solution and alleviate adverse environmental effects of excessive production of wastes and cement production. Within this scope, the mortars with 0–30 wt% replacement of cement with modified-WTS (MWTS) were produced as binary blend and also, they were combined with FA/BFS as ternary blended binders. Therefore, optimum utilization of waste products into mortar in terms of rheological, mechanical, durability, microstructural properties and environmental-economical aspects were examined. Adding 10% recycled-WTS as binary caused higher strengths with lower porosity measured by Mercury Intrusion Porosimeter test and denser microstructure, as revealed by XRD patterns and SEM results. However, the drawbacks of using recycled-WTS, in terms of rheological parameters and environmental-economical aspects, were suppressed by adding FA/BFS with comparable strength values. Specifically, cost, CO2 footprint and embodied energy were reduced by combining 10% MWTS with FA by 8.87%, 37.88% and 33.07%, respectively, while 90-day compressive and flexural strength were 5.1% and 5.32% lower. This study developed a feasible solution to use recycled-MWTS by obtaining more eco-friendly and cost-effective cement-based materials.