The presented study concerns the safe management of fly ash from municipal solid waste incineration. This fly ash was contaminated with heavy metals (HMs) and an excessive content of chlorides, which necessitate immobilization to prevent their leakage into the environment, thereby mitigating serious risks to humans, plants, and fauna. The ash was utilized as a mineral admixture in magnesium potassium phosphate cement- (MKPC-) based mortars, also containing borax, silica sand, and diatomite, whose high specific surface area and porosity inflicted the enhancement of the HM-immobilization efficiency of the MKPC matrix. The structural, mechanical, and hygric properties of the hardened mortars were assessed. Emphasis was placed on analyzing the leachability of HMs and chlorides - the concentrations were compared to the established limits for waste that can be safely landfilled or utilized, for instance, as a filler in construction composites and in the groundwork of roads, pavements, etc. The integration of diatomite and municipal solid waste incineration fly ash (MSWIFA) into mortar mixes resulted in increased porosity and a consequent reduction in mechanical strength. Nonetheless, for structural applications, the mechanical strength remained within acceptable limits for the incorporation of the ash/diatomite blend up to a dosage of 20 wt% relative to the binder mass. The observed reduction in mechanical properties of mortar with 20 wt% of MSWIFA alone suggests that combining the ash with diatomite is a more effective solution for treating this potentially hazardous waste. The identified HMs, namely As, Ba, Cd, Cr, Cu, Hg, Ni, Pb, and Zn, were effectively immobilized in the MKPC-based mortars based on the enhanced immobilization achieved through the blending of MSWIFA with diatomite. Similarly, chlorides were incorporated into the mortars' matrix, with their concentrations in the leachates remaining safely below the prescribed limits.