In the case of Indian coastal thermal power plant, ash disposal area is created by constructing peripheral dyke embankments for safe storage of coal ash. In one of the NTPC’s coastal thermal power plants at Vallur, ash pond has perimeter of 7000 m in high seismic Zone-III. The ground of ash pond area is generally flat and located adjacent to Ennore creek in coastal area. As per investigation, the top soil of 6.0–8.0 m depth comprised of soft to medium stiff clay having low SPT values ranging from 2 to 7 and underlain by sandy soil. The subsurface investigations revealed that strata below dyke embankment/associated structures is in loose condition and is prone to liquefy in the event of an earthquake. Therefore, ground improvement got necessitated for mitigation of liquefaction hazard, improving bearing capacity and to bring down the residual settlements to enable proposed structures to perform satisfactorily. Further, during execution of ground improvement and dyke embankment construction, challenges were posed due to being in waterlogged zone of coastal area. Detailed construction methodology is formulated including the dewatering and method of ground improvement for working in constrained site conditions. With the adopted construction methodology and construction techniques, the intended structures in ash pond have been successfully completed within schedule time and are presently under successful operation for power generation. This paper presents the challenges and adopted strategies in design and construction of sustainable dyke embankment for ash pond in coastal environment.