<p>The construction of any infrastructure on highly compressible soil (HCS) is considered as problematic due to its low bearing capacity, and high swelling/shrinkage behavior. Earlier, the stabilization of problematic clay soils is achieved commonly by using various chemical additives alone/or in combination with other pozzolanic materials such as bentonite, fly ash, and slag. Recently, stabilization of soil by using diminutive amount of nano-additives alone or with conventional stabilizing materials is an emerging trend. Therefore, the present study investigates the effect of nano-clay (NC) on the engineering and leachability behavior of both HCS and lime-treatment HCS. A series of unconfined compressive strength (UCS), consolidation, permeability, leaching potential, physicochemical, microstructural, and mineralogical analysis have been carried out for its possible use in various civil/geotechnical engineering projects. It is revealed that nano-clay, irrespective of lime treatment and curing period, has caused an adverse effect to the UCS of HCS. Interestingly, one-dimensional swelling percentage of untreated and treated HCS has reduced, whereas compressibility of samples has increased with nano-clay percentage. Further, application of nano-clay has reduced the hydraulic conductivity significantly of flocculated lime-treated HCS. Leaching potential of heavy metal ions, namely, Cd, Mg, and Zn through the HCS-NC and lime-treated HCS-NC mixed is found to be lower than the allowable limit. Finally, mechanism of alteration in physical and engineering properties of both untreated and treated samples with nano-clay percentage is elucidated by performing physicochemical, mineralogical, and microstructural changes.</p>