The transition toward low-carbon and resource-efficient construction materials is critical to addressing the environmental burden of the built environment. Simultaneously, coal-fired power plants generate substantial quantities of fly ash, posing significant disposal challenges while offering untapped potential as a secondary raw material. This study explores the sustainable valorization of coal fly ash into eco-efficient concrete blocks, positioning industrial waste as a functional material within a circular construction framework. An experimental investigation was conducted using five levels of fly ash substitution (0–20%) as a partial replacement for cement. The produced concrete blocks were evaluated in terms of dimensional stability, compressive strength, and water absorption, following Indonesian standards (SNI). Statistical analyses, including ANOVA and t-tests, were applied to validate the significance of performance variations and compliance with material standards. The results demonstrate that fly ash incorporation significantly enhances both mechanical and durability properties, albeit with a performance trade-off. The optimal compressive strength was achieved at 5% substitution (80.48 kg/cm²), representing an approximately 80% increase compared to the control sample. Conversely, higher substitution levels improved durability, with the lowest water absorption observed at 20% fly ash (7.43%). All samples satisfied dimensional and water absorption criteria, while compressive strength exhibited statistically significant differences (p < 0.05). These findings indicate that low-level substitution maximizes structural performance, whereas higher substitution enhances long-term material durability. This study provides empirical evidence that coal fly ash can be effectively transformed into a high-value sustainable construction material, reducing reliance on carbon-intensive cement and minimizing waste disposal. The findings contribute to advancing circular material strategies and support the development of scalable, low-cost, and environmentally sustainable building materials, particularly in emerging economies.