Expansive clayey soils present persistent engineering challenges due to their high plasticity and pronounced swelling behavior upon moisture fluctuation. Conventional stabilization methods such as lime and cement treatment are effective but entail substantial economic and environmental costs. This study investigates the viability of coal-derived bottom ash (BA), sourced from the Norochcholai Coal Power Plant in Sri Lanka, as a sustainable and cost-effective stabilizing additive for expansive clayey soil. A systematic laboratory programme was conducted in which BA was incorporated as a partial replacement for natural clay at dosages of 15%, 25%, and 35% by weight. The geotechnical response of each mixture was evaluated through Atterberg limits tests, free swelling index (FSI) tests, and standard Proctor compaction tests, supplemented by sieve analysis and specific gravity determination of the parent materials. The untreated control soil exhibited a liquid limit (LL) of 37.05%, a plasticity index (PI) of 20.12%, and an FSI of 26.67%, classifying it as a medium-plasticity expansive soil. Progressive addition of BA produced a consistent reduction in both PI and FSI across all treatment levels, with the 35% BA mixture achieving the lowest PI (16.22%) and FSI (22.22%), corresponding to a transition to the low-plasticity class per the Unified Soil Classification System (USCS). Compaction results showed a systematic increase in optimum moisture content (OMC) from 20.45% to 24.20% and a gradual decrease in maximum dry density (MDD) from 1579.01 kg/m³ to 1535.45 kg/m³ with increasing BA content, attributable to the porous and lightweight nature of BA particles. Collectively, these findings confirm that BA effectively mitigates the expansive characteristics of clayey soils and offers a promising pathway for simultaneous waste valorization and sustainable ground improvement, particularly relevant to Sri Lanka’s growing thermal power sector.