Mount Merapi is one of the most active volcanoes in the world with eruptions every two to five years. Frequent eruptions, with the resultant volcanic ash, have become an important environmental issue when it is not effectively reduced. In engineering practice, utilization of volcanic ash as substitution material is limited. Indonesia has a large road on soft soil, and volcanic ash can be used as an alternative soil improvement. The objectives focus on the effect of volcanic ash content as substitution material for soil stabilization and also as a new approach, in view of environmental aspects, for soft-soil improvement. Engineering properties of soil mixture, the effect of volcanic ash content and its fines level are discussed. The fineness of volcanic ash (pozzolan) is a primary factor in the stabilization process. Utilization of volcanic ash with a grain size passing sieve number 270 is more effective. The effect of volcanic ash content on soil stabilization can: (1) improve the engineering properties of soft soil; (2) change the grain size distribution curve by decreasing the fine fraction; (3) decrease consistency limits and become non-plastic soil; (4) increase bearing capacity; and, (5) decrease swelling potential. The addition of 35% volcanic ash and 9% lime gives the most significant effect on soil improvement.