This article presents the effect of palm oil fuel ash as a supplementary cementitious material on chloride penetration and microstructure of blended cement paste. Palm oil fuel ash (POFA) was ground to obtain two finenesses: one was the same size as the cement and the other was smaller than the cement. Type I ordinary Portland cement (OPC) was replaced by POFA at 0, 10, 20, 30, and 40% by weight of binder. All paste specimens were prepared using the same water to binder ratio as 0.35. The compressive strength, pore size distribution, total chloride content, free chloride content, and X-ray diffraction analysis of chloride penetration into blended cement pastes were investigated. The results indicated that, at 60 and 90 days, the blended cement pastes containing 30% of POFA with high fineness had 1.6 and 4.9% higher compressive strength than that of the OPC paste, respectively. POFA pastes had a lower chloride diffusion coefficient and shallower concentration profile of free chloride than that of the OPC paste. The specimens containing coarse fineness and small particle size POFA had lower chloride diffusion coefficient than OPC paste ranging between 13.2 and 61.0%. In addition, the chloride diffusion coefficient is linearly correlated with the critical pore diameters. Replacement of OPC by the fine-grained POFA resulted in the decrease in free chloride and in the chloride diffusion coefficient.