As a result of a tragic industrial accident, a highly alkaline red mud sludge inundated settlements and agricultural areas near Ajka, Hungary on October 4, 2010. One of the major concerns about the aftermaths of the accident is the potential health effects of vast amounts of fugitive dust from red mud sediment. Thus, we studied the chemical and physical properties of particles of red mud and its respirable fugitive dust, and performed toxicity measurements. Under unfavorable meteorological conditions dry red mud sediment could emit very high amounts of respirable alkaline particles into the air. The number size distribution of fugitive dust peaks above 1 μm aerodynamic diameter; therefore, its inhalation is unlikely to affect the deep regions of the lungs. No significant mineralogical or elemental fractionation was observed between the sediment and dust, with the major minerals being hematite, cancrinite, calcite, and hydrogarnet. Although the high resuspension potential and alkalinity might pose some problems such as the irritation of the upper respiratory tract and eyes, based on its size distribution and composition red mud dust appears to be less hazardous to human health than urban particulate matter.