Recycled aggregates can effectively replace natural aggregates in the cement stabilized layer of pavement, but the impact of 0–2.36 millimetre recycled fine aggregates (RFA) on the performance of cement stabilized macadam (CSM) is unclear. This paper was aimed at evaluating the impact of 0–2.36 mm RFA on mechanical properties and shrinkage performance of CSM incorporating 0–2.36 mm RFA (CSM-2.36RFA). The unconfined compressive strength (UCS), indirect tensile strength (ITS), drying shrinkage and temperature shrinkage were tested. Test results showed that the impact of 0–2.36 mm RFA on mechanical properties of CSM-2.36RFA were closely related to cement content. When the cement content was 4%, the UCS and ITS decreased with increasing 0–2.36 mm RFA content. However, the UCS and ITS increased first and then decreased with the increase of 0–2.36 mm RFA content containing 5% or 6% cement. The drying shrinkage performance of CSM-2.36RFA was deteriorated with increasing 0–2.36 mm RFA content. The cement content is the most important negative factor affecting the temperature shrinkage performance of CSM-2.36RFA, while the 0–2.36 mm RFA content has a little effect on the temperature shrinkage performance. Fuzzy matrix theory was used to evaluate various mix proportions, 6% cement and 30% 0–2.36 mm RFA had the best mechanical properties and shrinkage performances for CSM-2.36RFA.