This study investigates the suitability of waste paper pulp as a partial replacement for fine aggregates in mortar production, with the aim of developing lightweight, sustainable, and functional papercrete blocks. Waste paper was incorporated into mortar mixes at replacement levels of 0–100%, and the resulting blocks were tested for density, water absorption, compressive strength, fire resistance, and acoustic insulation following ASTM and BS EN standards. Results revealed that density decreased progressively from 2032.2 kg/m³ (PS-00) to 657.0 kg/m³ (PP-100), classifying mixes from PP-20 to PP-100 as lightweight blocks suitable for non-load-bearing applications. Water absorption increased significantly from 6.3% to 59.8%, with only the control sample meeting NIS/BS requirements (≤12%). Compressive strength reduced from 3.8 N/mm² to 0.36 N/mm², indicating that mixes with up to 10–20% paper content are structurally viable, while higher percentages are suitable for acoustic or decorative panels. Fire resistance decreased from 45 to 5 minutes with increasing paper content, whereas acoustic performance improved from 30 dB to 46 dB due to increased porosity. The study concludes that waste paper enhances sustainability and acoustic performance but compromises strength and fire resistance at higher percentages; therefore, the optimum mix falls within 10–20% paper replacement for lightweight, non-load-bearing construction applications.