It is generally agreed that aqueous carbonation of basic oxygen furnace slag (BOFS) is a promising and effective strategy to sequestrate CO2 and enhance the slag properties for use as a construction material. However, the handling of wastewater produced in the aqueous carbonation route is still a challenge. This work investigates the impact of co-utilizing carbonated BOFS as a partial cement replacement and carbonated filtrate as a mixing solution on the fresh and mechanical properties as well as the hydration and microstructural characteristics of cement paste. The carbonation duration of BOFS via the aqueous route (0, 10, 20, 30, 40, 80, and 120 min) was studied, and it was found that calcite was the dominant CaCO3 polymorph with different crystal shapes depending on the concentration of Mg ion in the slurry solution. The early-age compressive strength of blended cement pastes improved with the addition of 15% BOFS slurry carbonated for 40 min compared to as-received BOFS since the in-situ produced fine CaCO3 particles in the former could promote nucleation sites for cement hydration. However, the strength of pastes containing BOFS slurry carbonated for a longer duration was decreased due to the inhibited hydration reaction induced by the nesquehonite (MgCO3∙3H2O). At later ages of hydration, the nucleation effect was less obvious and the strength of cement paste was limited by the lower cement content. Moreover, the volume expansion issue caused commonly by f-CaO/MgO in BOFS can be improved through the precipitation of CaCO3 and nesquehonite.