In this paper, a detailed characterisation of Tungabhadra (TB) reservoir sediment, such as physical, chemical, geotechnical, morphological and mineralogical attribute, is performed to identify the suitability of dredged sediment as engineering material. Characteristics of sediment is, however, compared with Indian Standard codes for specific engineering applications. Through this study, it is depicted that sediment obtained from the TB Dam reservoirs as such cannot be used for engineering purpose (such as a fill material for highway construction, as sand for concreting and plastering and as foundry sand and other applications); these sediments need prior treatment before using them for the above-mentioned applications. However, it can also be noted that to enhance the strength properties of sediment, air-cooled blast furnace slag (ABS) can be used as a stabiliser. On the other hand, ABS is treated as waste material in steel industry. Thus, it is concluded from this study that TB Dam sediment can be used for many engineering applications provided proper screening and stabilisation technique is adopted. Thus, the cost of dredging is converted into profit by selling the TB Dam sediments for engineering applications.