Bagasse is produced as a waste in the sugar production process, which is used as fuel to stoke boilers in the sugar mills. The concluding product of this burning is residual sugarcane bagasse ash (BA), which is normally dumped or used as low-quality fertilizer. The ash for this study was collected from a reputed sugar mill located in the northern region of Bangladesh. Type I Portland cement (PC) was partially replaced with that finely ground bagasse ash without any pretreatment. The ground BA was used as a replacement for Portland cement at 5, 10, 15, 20, 25 and 30% of BA, respectively, in structural mortar. In addition, chemical characterization, specific gravity, X-ray diffraction (XRD), scanning electron microscopy (SEM), setting time, a strength activity index, compressive strength, water absorption, density and durability in a chloride environment of mortar were determined. The strength activity index result indicates that the used BA has the pozzolanic properties to be used as a partial cement replacement. The results showed that, at the age of 56 days, the mortar samples containing 5–15% ground bagasse ash had higher compressive strengths than the control mixture (mortar without ground bagasse ash). Mortar containing 15% ground bagasse ash had the highest mechanical and durability properties. Therefore, the substitution of 15% BA is acceptable for producing good quality structural mortar in the civil engineering construction field except in chloride environments.