Alkali-activated materials (AAMs) possess several advantages, such as high strengths and low carbon emissions. However, their application is hindered due to their significant shrinkage. This study explored the effect of borax-modified sodium silicate activator and metakaolin (MK) on the mechanical properties and drying shrinkage (DS) of alkali-activated slag (AAS) and AAS/MK (AASM) mortars. X-ray diffraction, scanning electron microscopy, and Fourier-transform infrared spectroscopy were used to characterize the hydration products. The results showed that the DS reduction of the AAS mortar was related to decreased Na2O content, a reduction in the proportion of mesopores, and the formation of moisture-retaining borate compounds. The DS reduction of the AASM mortar was attributed to the ultra-fine differential effect induced by MK, reducing the connected pores. The modified activator combined with MK increased the chemically bound water content in the matrix. Additionally, the B–O bond and highly active MK improved compactness of the AASM mortar. The use of borax-modified activators and MK provides a new solution to address the significant shrinkage issue in AAMs. This sets the stage for AAMs to potentially replace OPC, contributing to low-carbon emissions and promoting environmental protection.