Circulating fluidized bed fly ash (CFBFA) is a by-product from the combustion in circulating fluidized bed boiler in power plants. Herein, to resourcefully utilize CFBFA and reduce cement consumption, the CFBFA was ground (GCFBFA) and used to prepare low-carbon lightweight foamed concrete (LFC) for subgrade filling. The effect of GCFBFA substitution ratio on the blended cement binder and LFC was investigated. It was found that incorporation of 30 wt% GCFBFA stimulated cement hydration and produced more hydration products including C-S-H and AFt, thus enhancing the performance of binder. For LFC, GCFBFA improved the stability of fresh LFC slurry and the air-void structure by increasing the rheological properties of binder, thus improving the mechanical properties and durability including water stability and freeze-thaw resistance. The extension of setting time and reduction in hydration heat due to GCFBFA can be beneficial for transportation and massive construction. For subgrade filling, the GCFBFA content is limited to 50 wt% for LFC with wet density of 600 kg/m3 (D600) and up to 70 wt% for D700 and D800. Life cycle assessment (LCA) showed that a reduction of 52.3% in global warming potential and 43.2% in total cumulative energy consumption for the production of LFC was achieved when GCFBFA replaced 70% of cement.