The fine fraction (< 80 µm) of recycled aggregates from construction and demolition wastes, currently considered as waste, is investigated as a candidate mineral additive for partial replacement of Ordinary Portland Cement (OPC) to reduce the environmental impact of cementitious materials. Although recycled powder could affect hydration reactions due to the presence of residual anhydrous cement particles and to its high specific surface area, very few studies are available in literature concerning these aspects. Cement pastes and mortars prepared with 0%, 10%, and 20% replacement by weight of OPC by either Recycled Powder (RP) or Limestone Filler (LF) are compared in terms of hydration degree, mechanical and transport properties using several techniques, including Isothermal Calorimetry (IC), Thermogravimetric Analysis (TGA), water porosity, mercury intrusion porosimetry and gas permeability. The results revealed that mixtures blended with RP or LF have a similar decrease in the overall hydration degree compared to the hydration degree of pure OPC mixture due to a dilution effect, although both additives have a small reactivity. A moderate increase in porosity and intrinsic permeability with the replacement rate is observed. Pastes and mortars blended with RP have a compressive strength and a Young modulus nearly identical to those with the same amount of LF, despite RP having worse properties than LF. A multiscale micromechanical model is established and reproduces faithfully these experimental results for the elastic moduli, based on the simplified assumptions that LF is nearly inert while RP reduces the effective water to binder ratio by both absorption of water and internal hydration reactions.