Coral sand cement (CSC) mortar is increasingly used in reef projects, which is prepared by mixing coral sand with cement and water in certain proportions. Considering that early-age hydration behavior is closely related to the strength and durability of the mortar, the early-age hydration process and micro-morphology of CSC mortars with various water–cement ratios (W/C) and sand–cement ratios (S/C) were studied. A monitoring system based on FBG is proposed in this paper, which uses the high sensitivity and conformability of optical fiber to measure the hydration temperature and internal shrinkage strain simultaneously and continuously. The standard sand cement (SSC) mortar with the same sand gradation and mix proportion is also prepared for comparison. The micro-morphology is observed by a scanning electron microscope (SEM) for measurement results’ explanation. The results show that the variation of the hydration temperature and shrinkage strain with hydration time of both CSC mortars and SSC mortars follow a unimodal function. Differently, the peak hydration temperature for CSC is obviously lower than that of SSC. The peak temperature of CSC mortar decreases linearly with the increase in S/C, and the decrease rate of the peak temperature is higher for CSC with small W/C than that with higher W/C. For mortars with lower W/C, the peak shrinkage strain of CSC is larger than that of SSC. Meanwhile, for mortars with higher W/C, the peak shrinkage strain of CSC changes to be lower than that of SSC, which is attributed to the significant water absorption characteristic of CSC. Therefore, as an eco-friendly lightweight aggregate, CS is more suitable than SS for the design of high W/C and alleviating the hydration heat of mass concrete under the meeting of strength.