This study examines the effectiveness of recycled concrete aggregate (RCA) in enhancing the durability of laterite soil (LS) stabilized with lime (L) under cyclic wetting and drying conditions, aiming to provide a sustainable alternative to traditional cement-based stabilization methods. Mixtures of LS with varying RCA contents (0, 5, 15, 30, and 45%) and 6% L were prepared and tested for UCS, weight loss, and water absorption. The results indicated that the incorporation of RCA significantly improved the UCS values, meeting the sub-base standards set by Thailand’s Department of Highways (DOH). Strength was observed to increase until the third wetting-drying cycle, followed by a reduction by the sixth cycle, although still meeting sub-base requirements. Microstructural examination via Field Emission Scanning Electron Microscopy (FESEM) identified the formation of cementitious compounds due to the unhydrated cement in RCA and pozzolanic reactions from lime, which effectively bonded soil particles. However, the strength reduction in later cycles was linked to volumetric fluctuations that generated internal stresses, compromising bond integrity. Additionally, the dissolution of cementitious compounds leads to surface degradation and microcracking, further reducing the strength. These findings suggest that RCA-lime stabilization is a promising, eco-friendly solution for enhancing the durability of road sub-bases in tropical climates.