This study has been under taken to understand the influence of sulphate content on two extreme types of fine-grained soils, namely montmorillonitic black cotton soil and kaolinitic red earth stabilised with optimum lime content of 6%. . It has been observed that unusual increase in liquid limit and plasticity index of both types of lime treated soils occurs in the presence of sulphate. However, only the shrinkage limit of expansive soil decreases in the presence of sulphate. Compressibility of lime treated soil containing sulphate increases significantly after curing for one year. The strength of both the lime treated soils decreased considerably due to alteration of soil lime reactions products to swelling ettrengite type of compounds in the presence of sulphate. The strength decrease is more for expansive montmorillonitic black cotton soil than in kaolinitic red earth soil. Use of barium chloride in the proportion of two times the weight of sulphate overcomes the adverse effects of sulphate in lime stabilised soils.