After undergoing thermal braising and magnetic separation, steel slag is typically ground into steel slag powder (SSP). Owing to its hydraulic and pozzolanic activity, SSP has emerged as a promising supplementary cementitious material for partial replacement of cement in mortar. However, its effects on the performance of polyvinyl alcohol fiber-reinforced cement mortar (PVA-CM) remain insufficiently explored. This study systematically examines the influence of SSP substitution on the workability, mechanical properties (compressive and flexural strength), flexural toughness, microstructure, and pore structure of PVA-CM. The findings indicate that SSP incorporation marginally improves the fluidity of fresh mixtures. While both compressive and flexural strengths are largely maintained at SSP contents up to 20 wt%, flexural toughness shows a marked reduction beyond 10 wt%. This reduction is primarily attributed to the decreased formation of calcium silicate hydrate (C–S–H) gel, which weakens the fiber–matrix interfacial bond. scanning electron microscopeobservations reveal a dense and well-bonded fiber–matrix interface at 10 wt% SSP, whereas higher replacement levels induce micro-cracking and interfacial debonding. Based on these results, an optimal SSP dosage of 10 wt% is recommended to achieve a balance between mechanical performance and the sustainable utilization of industrial by-products.