Ignition of waste paper sludge at elevated temperatures to produce electricity in power generation plants utilizing fluidized bed combustion generates paper sludge ash. Due to the high concentration of lime and gelignite in paper sludge ash, it is expected that it will play a vital role as a cementitious material. This paper investigates the use of paper sludge ash to improve the mechanical properties of the granular materials, which are suitable to subbase course for road and building constructions. Also, a comparison study with the use of Portland cement as an additive to granular materials has been covered. The mechanical properties were evaluated by conducting the California bearing ratio test for the two adopted methods. Moreover, the compressive strength of the samples using paper sludge ash and cement are investigated. In accordance to the California bearing ratio test, 4% paper sludge ash was indicated as the optimum ash content at which the California bearing ratio value increased by 173% and 111% in comparison with untreated material and 6% cement, respectively. On the other hand, and by means of the compressive strength, the granular materials with 4% paper sludge ash has compressive strength higher than those with 6% cement.