This paper is concerned with the influence of fly ash (pozzolanic) on the stabilization of a dispersive soil commonly found in northeast Thailand. The effect of various proportions of fly ash on the rate of erosion, dispersiveness, strength and frictional properties and the compaction and consolidation characteristics, are discussed. It is noted that in general the addition of fly ash not only inhibits erosion and dispersiveness but also contributes to a significant improvement in strength and deformation characteristics. Nevertheless, excessive quantities of fly ash (>8%) generate diminishing returns and in fact promote segregation (erosion) of the stabilized soil again due to insufficient cohesion. Mineralogical studies based on X-ray diffraction analysis indicate that the reduction in the rate of erosion of the blended soil is associated with fine particle flocculation. The long term properties, however, are directly linked with the self-hardening nature of fly ash which contributes to time-dependent strengthening of the stabilized soil.