This paper focuses on the use of sludge, which is currently a landfilled sand-like material left over from the processing of iron ore (IOP), representing an environmental burden. The incorporation of the material into some building mixtures like mortar or concrete can bring both environmental and technical benefit through the improvement of some properties of final mixture. Through the realization of the experiment programme, the authors have contributed to the knowledge about IOP and have determined the impact of this material on the properties of mortar mixture. This material is characterized using chemical, mineralogical, and granulometric analysis and then applied as 100% replacement of silica sand in standard mortar mixture. Basic physical-mechanical parameters (water demand, flexural strength, compressive strength) were tested. For the strength characteristics, both the samples with IOP sludge and samples with standardized sand (reference sample) were subjected to testing for a long-term period (14, 28, 270, and 365 days). Moreover, the capillary moisture was measured for 28-day old samples. Mortar prepared with IOP sludge shows lower compressive strength compared to the reference mixture throughout the overall time development, although the values themselves are sufficient for practical application. The flexural strength was found to be even better. The performance of the IOP sludge can be deemed as promising for practical applications when used in cement mortar.