The increasing amount of incineration ash raised significant environmental concerns, particularly regarding waste disposal and pollution. To address these issues and promote sustainable development, this study explored the production of terrazzo tiles using a fine aggregate of waste incineration bottom ash (WIBA) and a ternary binder of cement, fly ash, and hydrated lime. The findings revealed that the substitution of cement with hydrated lime at an optimal level (i.e., 1% by weight) enhanced the flexural and compressive strengths while reducing the surface water absorption of the terrazzo tiles. The surface abrasion resistance remained relatively unchanged due to the consistent use of the same surface material across samples. Observation of scanning electron microscope images further confirmed the obtained engineering properties of the terrazzo tiles. As a result, the terrazzo tiles met the Vietnamese National standard requirements for external use, further indicating their suitability for various applications in construction. This study found that the terrazzo tiles produced using a mixture of 13% cement, 1% hydrated lime, 10% fly ash, and 76% WIBA earned the lowest surface water absorption of 2.56% and the highest flexural and compressive strengths of 3.86 and 21.37 MPa, respectively. Whereas, the surface abrasion of the sample was recorded at 0.241 g/cm2, making it an optimal choice for practical use in construction.