In order to explore the red mud and lime subgrade material whether or not to satisfy some basic properties of subgrade soil, through the direct shear test and penetration test in laboratory, each test index with the different dosages of red mud is analyzed. The test results show that the increase of red mud with the different contents has a certain influence on the properties of subgrade material. When the red mud content is increased, firstly, its shear strength will be increased, then decreased. The shear strength of red mud - lime soil subgrade material will reach the maximum value when the red mud content is about 30%. Secondly, its impermeability is getting better and better, and when the red mud content increases to 40%, its permeability coefficient is stable with the increase of osmotic pressure.