Expanded perlite is a popular lightweight material widely used due to its outstanding insulating properties. The expansion conditions directly affect perlite characteristics and its suitability for use in various applications. The conventional industrial expansion technique suffers disadvantages that adversely affects product quality and limit the range of expanded perlite applications. To overcome the drawbacks of the traditional technique, a new expansion process has been developed based on a novel vertical electric furnace (VEF). The use of the novel VEF process enables detailed knowledge and better control of expansion conditions, which together with raw material physicochemical properties directly affect the expanded perlite quality. In the present work, an extended experimental campaign was performed to investigate the physical properties and morphology of fine perlite expanded in the VEF. Expansion experiments were also performed in a pilot-scale, conventional furnace and the properties of products from both processes were compared. The novel expanded perlite particles have superior properties, namely significantly increased compression strength, size homogeneity, competitive water and oil absorption capacity, decreased surface porosity and thermal conductivity compared to conventionally expanded samples.