The search for environmentally friendly and efficient additives for soil stabilization has intensified, focusing on minimizing the ecological footprint associated with conventional additives. This paper explores the viability of using magnesium-rich olivine, as a natural and sustainable additive for stabilizing soils. Olivine, a mineral abundant in the mantle of the Earth, is widely known for its ability to sequester atmospheric carbon dioxide, making it an environmentally beneficial choice. Also, olivine processing reportedly involves significantly lower financial and environmental costs, unlike common stabilizers like lime and cement. This paper investigates the effectiveness of magnesium-rich olivine in stabilizing an expansive soil, emphasizing its strength and swelling properties. Experimental investigations indicate that the addition of olivine substantially reduces the free swell index and enhances the UCS by around 3.2 times on curing for 28 days. From UCS tests, the optimal binder dosage is identified as 35%. Microstructural analyses confirm the precipitation of M–S–H and M–A–H gels resulting from chemical interactions between olivine and soil. This study shows the potential of magnesium-rich olivine as an eco-friendly binder material for stabilizing expansive soils.