Laboratory tests were conducted to investigate the effects of cyclic drying-wetting environments on the durability of dredged clay (DC) stabilized with ternary geopolymer based on fly ash (FA), ground granulated blast-furnace slag (GGBS) and desulfurization gypsum (DG). Furthermore, microscopic tests were performed to investigate the degradation mechanisms of the geopolymer-stabilized DC samples. The results showed that mass loss of all stabilized samples remained below 10%. The water content during drying-wetting cycles remained moderate, with the 12% DG samples exhibiting lower values for both the upper and lower water contents. The unconfined compressive strength (UCS) of the stabilized samples reached 1.6 MPa after 28 days of curing for the 8% DG samples. As the drying-wetting cycles progressed, the UCS initially increased but then decreased to 1.3 MPa after the 10th cycle, accompanied by the development of macro cracks. Microscopic tests revealed that gel-provided cementation and ettringite-induced filling were responsible for the strength improvement of the stabilized samples. The gel products generated by further polymerization and hydration contributed to the strength enhancement at the early stage of drying-wetting cycles. However, the partial destruction of cementation microstructure and decomposition of ettringite deteriorated the strength of stabilized samples with drying-wetting cycles. In conclusion, DC stabilized with the ternary geopolymer exhibited high strength and excellent durability under drying-wetting cycles. This stabilization method promotes the low-carbon utilization of substantial amounts of DC, highlighting its potential as embankment fill material while promoting environmental friendliness and sustainability amid rapid urbanization.