Soil stabilization is a technique to improve the weak soils and making them to meet certain requirements of the specific engineering projects. The type of soils available in Dakshina Kannada region of Karnataka State is laterite and Lithomarge clay. Its Plasticity Index is very high due to the presence of high percentage of silt and clay content. In the present investigation, an attempt is made to study the behaviour of laterite with and without adding chemicals. A chemical named Zycosoil, when added to water and mixed with soil alters its engineering properties that depend upon the type of the soil and dosage of chemical. These chemicals are liquid additives, which act on the soil to reduce the voids between soil particles and minimize adsorbed water in the soil for maximum compaction. In the present study, the effectiveness of Zycosoil in stabilizing the laterite soils of South Canara district is investigated through laboratory experiments. Various geotechnical properties are studied and correlations between different geotechnical properties and improvement in the soil properties with different percentages of chemical additions are derived. The important properties such as index properties, compaction characteristics, unconfined compressive strength parameters, California bearing ratio values and fatigue behaviour were studied. The results obtained indicate that there is an improvement in almost all properties with the addition of Zycosoil. © 2012 Indian Geotechnical Society.