Water-retentive asphalt concrete (WRAC), produced by incorporating water-retentive slurry (WRS) into porous asphalt concrete (PAC), could significantly reduce the surface temperature of pavements and is currently considered a promising tool for alleviating urban heat island effect. Based on laboratory test and microstructural analysis, the present study investigated the effects of varying the proportions of ground granulated blast furnace fly ash, calcium hydroxide and mixing water amount on workability of fresh WRS. In addition, the water absorbing capacity, compressive strength and flexural strength of the cured (hardened) WRS were determined. The microstructures of hardened WRS were examined using scanning electron microscopy in order to better understand the effect of hydration level and pore structure on the water absorbing capacity and mechanical properties of hardened WRS. The results showed that materials composition have significant effects on the water absorbing capacity, compressive strength and flexural strength of hardened water-retentive slurry, as well as the workability of fresh WRS. WRAC showed good moisture resistance, rutting resistance and low deformation resistance comparable to the control PAC. However, the use of WRAC resulted in a temperature drop of about 10 °C compared to the control PAC.