For strengthening sustainability of subgrade life-cycle service performance and storing industry solid wastes in seasonally frozen regions, compared to previous research of modified silty clay (MC) which consisted of oil shale ash (OSA), fly ash (FA), and silty clay (SC), we identified for the first time, the variations in the thermal insulation capability of MC with different levels of dry density and moisture content. Taking into consideration the effects of 0–20 freeze-thaw (F-T) cycles by a laboratory test, and by the numerical simulation of coupling moisture-temperature, while considering the effects of F-T cycles, the thermal insulation capability of the MC board and the XPS board were studied quantitatively. The testing results show that the thermal conductivity of MC and SC gradually decreases as the number of F-T cycles increases, and that of the XPS board increases with the increased number of F-T cycles, and tend to be of a constant value of 0.061 W/m/K after 17 F-T cycles. The specific heat capacity of the solid particles of the MC, SC, and XPS board does not change regularly as their moisture content, and the number of F-T cycles change, and their variations are in the range of the test error (2%). Simulation results show that MC has the advantage of the thermal insulation property to reduce the frost-depth of 0.21 m, and the thermal insulation property of the composite layer consisting of the MC and XPS board is greater to reduce the frost-depth of 0.55 m, so that it can protect both the SC and sand gravel of the experimental road from the frost heave damage. The research methods and results are very significant in accurately evaluating the thermal insulation capacity and the sustainability of MC and the composite layer consisting of the MC and XPS board, strengthening the stability of the subgrade and increasing the availability of industrial waste.