The dredged sludge was subjected to gradation improvement by incorporating recycled fine aggregate (RFA) and subsequently solidified employing ground granulated blast furnace slag (GGBS), carbide slag (CS), and phosphogypsum (PG). On this basis, the effects and mechanisms of RFA on the strength and dry-wet cracking resistance of sludge solidified with industrial by-products were investigated. The results indicated that as the RFA content increased, the unconfined compressive strength (UCS), splitting tensile strength, failure strain, strain energy density, and resistance to dry-wet deterioration of the solidified sludge all exhibited increasing trends. The UCS of the solidified sludge increased logarithmically with the increase of average particle size and uniformity coefficient of the mixed sludge, while a linear increase was observed with the reduction in fine particle (<0.075mm) content. The incorporation of RFA had a negligible effect on the quantity of hydration products but inhibited the transformation of AFt to AFm. The enhancement of strength and crack resistance in the solidified sludge due to the addition of RFA was primarily attributed to the formation of a skeletal structure resulting from the contact between larger particles.