Successful use of ethanol-gasoline blends as engine fuel alternatives depends on producing a stable homogeneous liquid fuel. It is crucial to avoid the phase separation phenomenon which occurs due to the hydrophilic character of alcohols and the solubility behavior of gasoline-alcohol-water three-component system. In this study an industrial byproduct is introduced as a new blending agent to ethanol-gasoline fuels, and its effects on the phase separation problem were investigated on samples prepared by blending unleaded gasoline with 5, 10, 15, and 20% (v/v) azeotropic ethanol, respectively.