This paper focuses on the potential use of kaolin and cement for stabilization of soft clay and the application of stabilized soil as a highway embankment material. The problem of soft clay which is encountered in many geotechnical projects is its low shear strength and bearing capacity due to poor engineering properties of the soil. Therefore, soft clay has to be improved before any ground improvement work can commence. The mechanical behavior of stabilized soil was investigated on the basis of standard Proctor compaction, California bearing ratio (CBR), unconfined compression and direct shear tests. The main objective of this paper is to assess the mechanical behavior of treated soil with cement and kaolin. The results of laboratory investigation indicate an increase in the shear strength, CBR value and unconfined compressive strength of the treated soil with binder composition of OPC 8%, K 2% and SS 5%. Besides, it was proven that engineering characteristics of stabilized soil with binder composition of OPC 8%, K 2% and SS 5% are superior to those stabilized with lower percentages (i.e., less than 2%) of kaolin. The outcome of the study is an optimal mix design of stabilized clay, which can be applied to improve soft clay. It is revealed that ordinary Portland cement can be partially replaced with 2% kaolin. Furthermore, the stabilized soil with cement and kaolin can be applied in highway construction; however, sufficient laboratory and in situ testing is needed before proceeding to field trial.