Securing water in the soil through suitable amendments is one of the methods for drought management in arid regions. In this study, a poor water sorbing fly ash was transformed into a high water-absorbing material for improving soil water retention during the drought period. The fly ash water absorbent (FAWA) exhibited high water-absorbing capacity (WAC) of 310 g/g at par with commercially available superabsorbent hydrogel (SAH). The FAWA showed excellent re-swelling behavior for more than eight alternate wetting–drying cycles. The WAC of FAWA was sensitive to salt type, pH, and ionic strength of the solution. At maximum salinity level permitted for plant growth, the WAC of FAWA was 80 g/g indicating its suitability for drought management. There was only a marginal WAC variation in the range of pH (5.5–7.5) considered most suitable for plant growth. The drying characteristics of FAWA amended soil exhibited an increase in desaturation time by 3.3, 2.2, and 1.5 times for fine sand, silt loam, and clay loam, respectively. The study demonstrates the success of using a low rate of FAWA for drought management with the advantage of offering a non-toxic and eco-friendly solution to mass utilization of industrial solid waste for agricultural applications.