A novel method for fabricating the periclase and magnesium aluminate spinel refractory from the secondary aluminum dross was proposed in the present work by adding magnesium oxide. The fabrication mechanism of the refractory was analyzed by thermogravimetric and differential thermal analysis, scanning electron microscopy, and X-ray Diffraction. The effects of MgO addition and sintering temperature on the mechanical properties and density of refractories were studied. The results showed that with the increase of sintering temperature, the purity, crystallinity, and densification of the refractory were significantly improved, and the porosity of the refractory was decreased. As an obvious second phase in the refractory, periclase can strengthen the grain–grain bonding and inhibit the grain boundary movement. With the increase of MgO addition, due to the significant reduction of porosity, the improvement of grain size uniformity and the absence of microcracks, the flexural strength and the impact toughness were significantly improved. When the MgO addition was 50 wt% at the sintering temperature of 1600 °C, the density and porosity of the refractory were 2.92 g/cm3 and 18.2%, while the flexural strength and impact toughness can reach 270 MPa and 3.7 MPa m1/2, respectively.