The feasibility of using a low-cost super hydrophobic powder as water-resisting admixture or water-repellent surface coating for concrete has been investigated. The powder was produced from paper sludge ash (PSA), a by-product from the manufacture of recycled paper. The effect of hydrophobic PSA on workability, strength and transport properties, including sorptivity, water absorption, diffusivity, permeability and electrical conductivity is reported. Samples were prepared at water/cement ratio of 0.38, cured up to 28 days and conditioned at 50 °C to constant mass prior to testing. It was found that replacing Portland cement with 12% hydrophobic PSA reduced water absorption, sorptivity and conductivity by 84%, 86% and 85% respectively, with no major detrimental effects on hydration, strength and density. When used as a surface coating, the hydrophobic PSA reduced both absorption and sorptivity by 85–99% depending on the adhesive used. Samples surface coated with hydrophobic PSA showed excellent water repelling and self-cleaning characteristics.