Worldwide, Portland cement-based materials are the most commonly used construction materials. As the Portland cement industry negatively affects the environment due to the excessive emission of carbon dioxide and depletion of natural resources, new alternative materials are being searched. Therefore, the goal of the paper was to design and develop eco-friendly, low-cost, and sustainable magnesium oxychloride cement (MOC)-based building material with a low carbon footprint, which is characterized by reduced porosity, high mechanical resistance, and durability in terms of water damage. To make new material eco-efficient and functional, silica sand which was used in the composition of the control composite mixture was partially replaced with coal fly ash (FA), a byproduct of coal combustion. The chemical and mineralogical composition, morphology, and particle morphology of FA were characterized. For silica sand, FA, and MgO, specific density, loose bulk density, and particle size distribution were measured. Additionally, Blaine specific surface was for FA and MgO powder assessed. The workability of fresh mixtures was characterized by spread diameter. For the hardened MOC composites, basic structural, mechanical, hygric, and thermal properties were measured. Moreover, the phase composition of precipitated MOC phases and their thermal stability were investigated for MOC-FA pastes. The use of FA led to the great decrease in porosity and pore size compared to the control material with silica sand as only filler which was in agreement with the workability of fresh composite mixtures. The compressive strength increased with the replacement of silica sand with FA. On the contrary, the flexural strength slightly decreased with silica sand substitution ratio. It clearly proved the assumption of the filler function of FA, whereas its assumed reactivity with MOC cement components was not proven. The water transport and storage were significantly reduced by the use of FA in composites, which greatly improved their resistance against moisture damage. The heat transport and storage parameters were only slightly affected by FA incorporation in composite mixtures.