The possibility of substituting natural fine aggregate with industrial by-products such as waste foundry sand and bottom ash offers technical, economic and environmental advantages which are of great importance in the present context of sustainability in the construction sector. The study investigated the effect of waste foundry sand and bottom ash in equal quantities as partial replacement of fine aggregates in various percentages (0–60%), on concrete properties such as mechanical (compressive strength, splitting tensile strength and flexural strength) and durability characteristics (rapid chloride penetration and deicing salt surface scaling) of the concrete along with microstructural analysis with XRD and SEM. The results showed that the water content increased gradually from 175 kg/m3 in control mix (CM) to 238.63 kg/m3 in FB60 mix to maintain the workability and the mechanical behavior of the concrete with fine aggregate replacements was comparable to that of conventional concrete except for FB60 mix. The compressive strength was observed to be in the range of 29–32 MPa, splitting tensile strength in the range of 1.8–2.46 MPa, and flexural strength in the range of 3.95–4.10 MPa on the replacement of fine aggregates from 10% to 50% at the interval of 10%. Furthermore, it was observed that the greatest increase in compressive, splitting tensile strength, and flexural strength compared to that of the conventional concrete was achieved by substituting 30% of the natural fine aggregates with industrial by-product aggregates. The inclusion of waste foundry sand and bottom ash as fine aggregate does not affect the strength properties negatively as the strength remains within limits except for 60% replacement. The morphology of the formations arising as a result of the hydration process was not observed to change in the concrete with varying percentages of waste foundry sand and bottom ash.