Sorbent utilization of CaO-based sorbents for in situ SO2 capture in fluidized bed combustion (FBC) is far from quantitative, and in consequence FBC residues contain a significant amount of unreacted CaO. Treatment of bed materials by hydration with liquid water or steam can reactivate the spent sorbent for further SO2 capture, although, to date, the costs of such processes have deterred its practical use. By contrast, fly ash is already very reactive, but given its short residence time in the combustor, direct reuse of fly ash appears to be an ineffective strategy. This is significant as fly ash often accounts for the majority of solid waste streams discharged from FBC systems. This paper describes a new technique for reactivation of FBC spent sorbent and preparation of pellets suitable for SO2 capture, which can also incorporate the fly ash into the pellets so that it has an adequate residence time in the primary combustion loop of a CFB to realize improved sulfur capture. Reactivation and pelletization of the spent sorbent were achieved simultaneously in a mechanical pelletizer with the addition of spray water. Four types of pellets were prepared with various proportions of bed ash and fly ash. Quick lime (CaO) powders were also tested as a useful additive for the pelletization process. The effectiveness of the reactivation technique was tested by the nitrogen physisorption, which confirmed that a more suitable pore surface area and pore volume distribution for sulfation were developed. The SO2 capture potential of the pellets was also examined in a thermogravimetric analyzer. The reactivated pelletized sorbents showed an improved sulfation rate in comparison to both the original sorbent and the spent sorbent, particularly during the diffusion-controlled reaction stage.