Utilizing sawdust efficiently to produce construction materials can help safeguard the environment and decrease costs by minimizing the need for traditional resources and reducing carbon dioxide (CO₂) emissions. Additionally, recycling sawdust plays an essential role in creating a sustainable ecosystem. Hence, this study aimed to examine the potential use of sawdust ash (SDA) as a partial cement replacement on foamed mortar (FM) properties, including its fresh, mechanical, transport, thermal, and microstructural properties. A variety of FM mixtures were tested for workability, density, consistency, intrinsic air permeability, porosity, split tensile strength, compressive strength, flexural strength, and thermal conductivity by replacing cement with SDA at varying percentages of 0%, 10%, 20%, 30%, 40%, and 50%. The results revealed that FM’s workability was reduced by the introduction of SDA with a higher percentage cement replacement, while the density of the FM mixtures was reduced due to SDA’s specific gravity being lower than that of cement. A linear improvement was observed in the air permeability, sorptivity, and porosity of FM–SDA composites with an increased SDA percentage to 20%. It is notable that these properties started to deteriorate once the cement replacement by SDA surpassed 30%. A noticeable improvement of mechanical strength properties of the FM was found at 20% of SDA content, but they deteriorated when the SDA content was more than 30%. FM blends with higher SDA contents exhibited larger and more apparent voids, according to SEM analysis. In conclusion, incorporating sawdust into formulations emerges as a viable method for FM production. This approach not only mitigates the environmental impact of sawdust disposal but also reduces the need for extracting natural resources in construction material manufacturing.