Red mud is a waste material obtained from the aluminium extraction industry and consists mainly of the oxides of aluminium, iron and titianium. The present red mud production in the country is above two million tons every year, which is not being put to any worthwhile use except as a filler to a small extent in the preparation of roads. Efforts have been made at CBRI to produce burnt clay bricks by partially replacing the clay with red mud and fly-ash. In this process, the red mud is expected to find a major use shortly. Efforts have also been made to incorporate in the red mud a small percentage of lime and compress the mix at optimum moisture content in the form of bricks with a purpose of examining their strength and stability to the erosive action of water. A maximum wet compressive strength of 3.75 MN m−2 with 5% lime and 4.22 MN m−2 with 8% lime has been obtained after 28 days of casting and humid curing in the month of August. The red mud sample studied was obtained from the Indian Aluminium Company. The brick samples were studied for accelerated weathering and found suitable for use as a walling material for low-cost shelters. Modifications in the red mud mix, especially from the viewpoint of particle size distribution, have also been examined simultaneously by its part replacement with coarse-grained soil and fly-ash. The results indicate that the basis of the beneficial action of lime on red mud is predominantly chemical.