Clay is the main construction material for clay cores of earth-fill dams. Clay minerals swell when they become wet and shrink when they dry out; cracks develop as they lose moisture. If precautions are not taken to prevent seepage through these cracks, dam failures may result. In this study, sand was added to montmorillonite-dominant clay soils to investigate the effect of sand-inclusion rates on the engineering characteristics of clay soils used in the construction of clay cores of earth-fill dams. Changes in the consistency limits, compaction characteristics, permeability, stress-strain relationships and swelling characteristics with increasing sand inclusion rates were evaluated. Based on the results from experimental trials, a 30% sand inclusion rate appears to be the optimum proportion; most of the swelling occurred in the voids of grains and led to permeability levels below the allowable limits for earth-fill dams.