With the continuous north expansion of urban area and the construction of underground projects such as subway and underground square in Lanzhou, the utilization of red sandstone in the area of Lanzhou becomes one of the important issues for attention in the engineering construction and site development. Taking engineering physical characteristics of red sandstone in the area of Lanzhou as the main research object, through a large quantity of laboratory tests and analysis, it is found that the red sandstone in the area of Lanzhou has the characteristics of low uniaxial compressive strength, easy to soften, easy to disintegrate, sand state after excavation, uniform particle size and poor grading. It is recommended to be treated as non-cohesive sandy soil in the fill project. On the basis of studying the engineering physical characteristics, the compaction properties of red sandstone in Lanzhou are explored. The compaction process of mixing clay plus low-level dynamic compaction is proposed, which has been successfully applied in the high-fill roadbed projects of urban areas, and provides the application insights and engineering references for the in-situ utilization of red sandstone in the area of Lanzhou.