A new ceramic product is introduced by mixing caustic magnesia, produced in the laboratory from pure, high quality magnesite, and natural silt. Bottom ash and red mud, two well known environmentally hazardous industrial by-products, were also added in the mixture. After testing various recipes we concluded that addition of 5% caustic magnesia in the ceramic product greatly enhances its performance. Increase bonding of the ceramic microstructure is attributed to the formation of periclase necks, the concurrent formation of small quantities of amorphous material and the homogeneously distributed pores during the experimental firing of the mixture. Combined X-ray Diffractometry and Scanning Electron Microscopy of the ceramic product revealed the occurrence of unreactive phases, inherited by the raw materials, as well as newly-formed albite and magnesioferrite. Our results show that utilization of by-products may be important and environmental friendly materials in producing low cost ceramic building materials.