The process of soil stabilization is a fundamental requirement before road infrastructure development is possible. Different binding materials have been used worldwide as soil stabilizers. In this study, water treatment waste (i.e., alum sludge (AS)) was used as a soil stabilizer. Alum sludge can work not only as a low-cost soil stabilizer but also can solve the problem of waste management at a large scale. Utilization of alum waste can be a sustainable solution and environmentally friendly exercise. Thus, in consideration of the pozzolanic properties of alum, it was applied as a binder, similar to cement or lime, to stabilize the soil with the addition of 2%, 4%, 6%, 8%, and 10% of dry soil by weight. To analyze the resulting improvement in soil strength, the California Bearing Ratio (CBR) test was conducted in addition to three other tests (i.e., particle size analysis, Atterberg’s limits test, and modified proctor test). The soil bearing ratio was significantly improved from 6.53% to 16.86% at the optimum level of an 8% addition of alum sludge. Furthermore, the artificial neural networks (ANNs) technique was applied to study the correlations between the CBR and the physical properties of soil, which showed that, at 8% optimum alum sludge, maximum dry density, optimum moisture content, and plasticity index were also at maximum levels. This study will help in providing an eco-friendly soil stabilization process as well as a waste management solution.