Massive shield tunnel muck is being landfilled without effective use due to high moisture contents and poor engineering properties, which not only leads to soil resources waste, but also occupies a large amounts of land sources. In this study, industrial waste phosphogypsum (PG) was recycled to improve the tunnel muck with lime, and the improved muck is aiming to be used in subgrade filling. A series of laboratory tests, including compaction tests, unconfined compressive strength (UCS) tests, california bearing ratio (CBR) tests, resilient modulus tests and microscopic tests were carried out. The effects of PG, lime, carboxymethyl cellulose (CMC) and moisture contents on physical, mechanical and microscopic properties of improved muck were examined, respectively. Results indicate that the incorporation of lime and PG significantly improves the mechanical properties and water stability of shield tunnel muck generated in silt stratum. The performance of improved tunnel muck meets the requirement for subgrade filling. Notably, for a fixed total contents of lime and PG, the proportion of 3:1 lime/PG results in the best mechanical properties and water stability. The tunnel muck generated in silt stratum mainly consists of lamellar and layered structures, which contributes to stronger cohesion among soil particles and the hydration products. The CMC has the ability to create cementation bonds among soil particles and the hydration products of lime and PG, resulting in a denser gel network microstructure.