Fly ash is one of the most abundant industrial by-products generated from coal combustion in thermal power plants. The large-scale accumulation of fly ash poses serious environmental challenges, including land contamination and air pollution. However, due to its unique chemical composition and physicochemical properties, fly ash has gained significant attention as a potential raw material for the development of advanced functional and smart materials. This review paper presents a comprehensive overview of the utilization of fly ash in smart materials and advanced composites. The chemical composition, classification, and physicochemical properties of fly ash are discussed to highlight its suitability as a functional filler and reinforcement material. Various synthesis techniques for fly ash-based smart materials, including geo-polymerization, polymer composite fabrication, and nanocomposite synthesis, are reviewed. Applications of fly ash-derived smart materials in areas such as construction materials, electromagnetic shielding, sensors, energy storage, and environmental remediation are critically analysed. Additionally, characterization techniques including X-ray diffraction (XRD), Fourier transform infrared spectroscopy (FTIR), scanning electron microscopy (SEM), and thermal analysis are discussed for evaluating the structural and functional properties of these materials. Finally, the challenges, environmental benefits, and future research directions for the development of fly ash-based smart materials are highlighted. The review demonstrates that fly ash has immense potential as a sustainable resource for advanced materials development and contributes to circular economy and waste valorization.