The rapid economic development in China places a large demand for energy, and as a result, thermal power plants in China are producing an enormous amount of coal fly ash (CFA) which causes severe environmental pollution. This paper briefly describes the current production and utilization status of CFA in China and identifies the challenges confronting sustainable CFA utilization as the Chinese economy is being transformed. These issues include a regional imbalance in supply and demand, reducing demand in the real estate industry as well as stricter laws for environmental protection. Viable directions for future CFA utilization are proposed, for example, production of CFA-based ceramic tiles, recovery of elemental resources, agricultural melioration, treatment of wastewater and flue gas, and production of high-volume CFA concretes. This paper has some guiding significance for sustainable and cleaner utilization of CFA in China and even worldwide.