Mortar made from concrete slurry waste (CSW) and municipal solid waste incineration bottom ash (MSWIBA) could be recycled into cold bonded lightweight aggregates (CBLA). However, the mechanism by which the CSW-MSWIBA mortar hardened and developed strength remains unexplored. Furthermore, the investigation in the previous study was limited to using the CBLA for wet precast lightweight concrete (LWC). Understanding the characteristic of CSW-MSWIBA mortar and exploring a new application of CBLA can promote the larger-scale recycling of CSW and MSWIBA. Herein, an investigation was performed on assessing the multi-component characteristics of CSW-MSWIBA mortar. The results showed that using MSWIBA (i.e., as compared to river sand) in CSW was advantageous for lower density and higher compressive strength of the mortar. The strength development of hardening CSW-MSWIBA mortar could largely be ascribed to the continuous cement hydration of CSW and the pozzolanic reaction between MSWIBA and CSW providing a better bonding at the CSW-MSWIBA interface. Following a pelletization process, the CSW-MSWIBA mortar was turned into cold bonded lightweight aggregates (CBLA). Through a trial of industrial-scale production, the CBLA were then used to fabricate semi-dry precast LWC, which met the LWC and masonry unit requirements as per BS EN 206 or JGJ/T 12 and BS 8103, respectively.