This study aimed to investigate whether alum sludge, a material that is normally disposed of in landfills as waste, could be used as capping material in crude oil contaminated soil capping applications. The remediation of a crude oil-contaminated site by in-situ capping was investigated by a parametric study using two-dimensional finite element analyses. In the finite element analyses, different crude oil contents (0%, 4%, 8%, 12%, and 16%), contaminated soil depths (0, 1, 3, 5, and 10 m), capping materials (alum sludge and compacted clay), and uniform surface loadings (2.0 and 5.0 kPa) were modeled, and the results of the analyses were evaluated in terms of displacement and factor of safety (FS) values. The results of this study showed that settlement increased with increasing crude oil content, contaminated soil depth, and surface loading conditions. However, the use of alum sludge as the capping material resulted in a lower settlement and lateral displacement, but higher FS values in comparison to those of the compacted clay for all the crude oil contents, contaminated soil depths, and surface loading conditions investigated. For all the cases studied, FS values greater than 1.5 were obtained for slope stability. Based on these results, it was concluded that alum sludge has favorable mechanical properties, and can be used as a comparable alternative to compacted clay for use in crude oil-contaminated site capping applications.