The effect of calcium-based stabilizers such as lime on the geotechnical properties of tropical soils has been reported by many researchers. However, the amount of literature available on the micro-structural, molecular, and leaching characteristics of lime and in particular phosphoric acid-stabilized lateritic clays has been limited. This research was carried out in an attempt to identify the time-dependent soil-chemical reactions. In addition, the possible mechanisms that contributed to the stabilization process were discussed in the light of various spectroscopic and microscopic techniques such as X-ray diffractometry (XRD), energy-dispersive X-ray spectrometry (EDAX), field emission scanning electron microscopy (FESEM), Fourier transform infrared spectroscopy (FTIR), and nuclear magnetic resonance spectroscopy (NMR) etc. Based on the results it was found that in lime-treated samples, the coating action of free iron oxides on clay particles imposed inhibitive effects on the dissolution of clay alumina. On the other hand, in phosphoric acid-stabilized soil, due to the increase in solubility of metal oxides and also the subsequent release of clay alumina the formation of cementitious compounds were more feasible. From engineering point of view, the phosphoric acid-stabilized lateritic soil showed the highest degree of improvement with an approximately threefold strength.