In this study, stone powder from manufactured sand was used as a supplementary cementitious material (SCM) to replace part of the cement. The effects of granite stone powder on the microstructure evolution of hardened cement paste were systematically examined through XRD, TG, and SEM analyses, establishing the optimal replacement content. The workability, mechanical properties, and cost of concrete prepared with manufactured sand were improved by optimizing the stone powder content, coarse aggregate gradation, sand-to-aggregate ratio, and water-binder ratio, while elucidated the influence mechanisms of paste volume fraction on these performance characteristics. The results showed that cement paste with 10wt.% stone powder retained a denser microstructure, as the amount of hydration products showed negligible reduction compared to that of pure cement paste after 7-day and 28-day curing. However, when the substitution of cement with stone powder exceeded 20wt.%, the amount of hydration products decreased significantly by more than 20%, leading to a porous microstructure and lower compressive strength compared to that of pure cement paste. When manufactured sand (MS) with high stone powder content was used in concrete production, the dosage of superplasticizer needed to be increased slightly under the same slump requirement. Additionally, the optimal workability and mechanical properties of MS concrete were achieved when the volume fraction of paste lay in the range of 31%~32%. Consequently, C30, C40, and C50 concretes meeting target property requirements were prepared using MS with 15.1 wt.%, 16.5 wt.%, and 18.7 wt.% stone powder content, respectively, resulting in cement consumption reductions of 54 kg/m³, 63 kg/m³, and 92 kg/m³, and thereby significant reductions in cost and carbon emissions.