The utilization of fly ash in construction and cement industry increases from last few decades. But the question on utilization of fly ash for construction purpose was raised by many investigators as it causes a source of radioactive gas radon and increase in the gamma dose. In order to optimize the utilization of fly ash in cement with additional benefit of reducing radon diffusion coefficient and exhalation rate were studied. The compressive strength of mortar is the key factor for cement industry, thus it should not be sacrificed for utilization of fly ash. Keeping this in mind, compressive strength, porosity, radon diffusion and exhalation rate study was carried out through the mortar reinforced with the blending of fly ash with cement. The results indicated decrease in effective radon diffusion coefficient from 0.363 9 10 -7 to 0.013 9 10 -7 m 2 /s for fly ash up to 50 % substitution. The addition of fly ash in cement first decreased the radon exhalation rates up to 25 % substitution then increases and similar trends were observed for compressive strength. Thus, the addition of fly ash exerts a positive effect up to a 20-25 % replacement beyond which it may introduce negative effect depending upon the level of substitution.