The petroleum industry is in demand of effective techniques for breaking stable emulsions. In order to develop a low-cost, green and effective demulsifier, fly ash taken from the local power plant was applied to water-in-oil emulsions of various concentrations and conditions. A thorough analysis of crude oil composition and ash sample structure was carried out. Emulsion separation kinetics demonstrated that the optimal temperature for the crude oil emulsions was 60 °C, but the demulsification efficiency was not satisfactory. To improve separation efficiency Tween 20 was applied to the emulsions in combination with grinded coal fly ash. This resulted in a higher demulsification efficiency (100% for some emulsions) and was justified by the microphotographs before and after demulsification. The optimal conditions found were as follows: 60 °C, Tween 20 (1600 ppm), and grinded coal fly ash (1 wt %). Finally, the demulsification process was investigated with FT-IR analysis to justify the proposed mechanism.