The solidification of construction waste slurry draws much attention today due to the increasing awareness of environmental protection. Magnesium oxychloride cement (MOC) was first incorporated to solidify slurry in combination with industrial residue, which has the potential to be used as roadbed material. Three types of binding materials including MOC, industrial residue, and industrial residue modified MOC were proposed to evaluate their performance in the solidification of construction slurry with high water content. The unconfined compressive strength (UCS) and coefficient of permeability were investigated, taking into account factors including MOC content, molar ratio of MgO/MgCl2, mass ratio of MOC to industrial residue, industrial residue content, and curing time. The microstructure was identified to reveal the intrinsic mechanisms by scanning electron microscopy (SEM). The results showed that the mechanical behavior of solidified slurry was largely influenced by these factors, and the industrial residue proved effective in improving the strength and permeability of MOC solidified slurry by impeding the decomposition of phase 5 and phase 3 and absorbing a certain amount of water. The industrial residue modified MOC solidified slurry showed higher water resistance and a lower coefficient of permeability due to the generation of amorphous calcium silicate hydrate (C-S-H) gels, phase 5 and phase 3 that could form a much stronger interlocking network. © 2020 American Society of Civil Engineers.