Metal finishing sludges usually require proper disposal due to their high content of leachable harmful species such as heavy metals. This study proposed an efficient and green remediation approach for the S/S of hazardous metal finishing sludge by incorporation of activated carbon (AC) as a cement replacement. Mechanical strength and leaching properties of the treated sludge were investigated. Meanwhile, the immobilization mechanisms were discussed on the basis of X-ray diffraction (XRD) and scanning electron microscopy coupled with energy-dispersive spectrometry (SEM–EDS). The effectiveness of the AC/cement binder in S/S was evaluated by comparing it to OPC alone. The experimental results showed that the addition of 10 wt.% of AC resulted in an improvement of the compressive and flexural strength at 28 days of curing by 13.5% and 10.2%, respectively. According to the TCLP test, the concentrations of heavy metals in the leachates of S/S specimens were within the corresponding regulations. From the pH-dependent leaching test, the release of the selected metals was strongly pH-dependent. AC replacement had a significant effect in the reduction of the metal’s leachability except for Zn. MLT leaching test indicated that the immobilization rate of heavy metals exceeded 97% for both binders. Linear regression analysis revealed that the leaching mechanism of heavy metals was dominated by diffusion. However, traces of surface wash-off and solubility were also detected. The SEM–EDS method demonstrated that heavy metals were stabilized through adsorption onto activated carbon.