A large amount of coal fly ash produced in thermal power plants is disposed of in landfills which causes many environmental problems. The utilization of fly ash can be encouraged in geotechnical engineering projects. In this paper, the effects of class C and class F fly ash on the mechanical and microstructural behavior and stabilization of clay soil were evaluated through a program of laboratory experiments. The experiments included compaction, unconfined compressive strength, consolidated-undrained triaxial, one-dimensional consolidation tests, and scanning electron microscopy analysis on samples of fly ash-stabilized clay soil after 1, 7, and 28 days of curing. The tests were conducted on mixtures of clay with class C or class F fly ash, ranging from 0% to 30% of the soil. Experimental results showed that the strength parameters and permeability of the stabilized soil improved while the compression and swelling indices decreased by the addition of fly ash and by the increase of curing days. The results obtained from the mechanical tests agreed with the results from the SEM analysis. Based on the results, the soil could be successfully stabilized by using class C fly ash. The improvements in strength, swelling, and permeability parameters of the stabilized soil were higher with the class C fly ash compared with class F fly ash.