This study presents a new method to produce lightweight aggregates (LWAs) by granulating peat-wood ash using alkali activators. Peat-wood ash was granulated with potassium silicate and sodium aluminate in a high shear granulator to produce spherical granules. Blast furnace slag, coal fly ash and metakaolin were studied as co-binders. A suitable liquid/solid ratio, granulation growth type, microstructure, strength, and crystal structure of granules have been determined. The granulation proceeded by induction-type growth behaviour and suitable liquid/solid ratio was between 0.34 and 0.43. In the BSE images it was observed that the precursor particles were embedded in a dense alumino-silicate matrix. The X-ray diffraction analysis supported the success of the alkali activation. All co-binders increased the strength of the granules, but the blast furnace slag produced the strongest granules. The study shows that by simultaneous granulation and alkali activation it is possible to increase the utilisation of ash and produce valuable products. (C) 2016 Elsevier B.V. All rights reserved.