The clayey soils have the capability to swell and shrink with the variation in moisture content. Soil stabilization is a well-known technique, which is implemented to improve the geotechnical properties of soils. The massive quantities of waste materials are resulting from modern industry methods create disposal hazards in addition to environmental problems. The steel industry has a waste that can be used with low strength and weak engineering properties soils. This study is carried out to evaluate the effect of steel slag (SS) as a by-product of the geotechnical properties of clayey soil. A series of laboratory tests were conducted on natural and stabilized soils. SS was added by 0, 2.5, 5, 10, 15, and 20% to the soil. The conducted tests are consistency limits, specific gravity, hydrometer analysis, modified Proctor compaction, swelling pressure, swelling percent, unconfined compressive strength, and California Bearing Ratio (Soaked CBR). The results showed that the values of liquid limit, plasticity index, optimum moisture content, swelling pressure, and swelling percent were decreased when stabilized the soil. However, the values of maximum dry density, unconfined compressive strength, and California bearing ratio were increased with the addition of steel slag with various percentages to the clayey soil samples. The steel slag was found to be successfully improving the geotechnical properties of clayey soils.