Polypropylene (PP) is one of the most widely produced types of plastic worldwide, but its recycling is limited. This work presents a study of the utilization of expanded polypropylene (EPP) waste in a magnesium oxychloride cement (MOC) composite usable in the building industry. MOC is formed by mixing magnesium oxide powder and a concentrated solution of magnesium chloride and is characterized by excellent bonding ability to large quantities of different types of aggregates. A developed air-cured MOC composite, where an EPP-based aggregate was used for the full replacement of natural aggregate, was investigated in terms of its basic physical, mechanical, thermal and water resistance properties. The results demonstrate that incorporation of EPP waste greatly improved the thermal insulation properties, while the mechanical resistance was reduced to an acceptable level. The developed MOC composite containing EPP waste can be considered as an alternative thermal insulation material applicable for the construction of floor or envelope construction systems.