The potential of Pontoscolex corethrurus to repair the physical degradation of a compacted Oxisol was studied. The Oxisol from Kingaroy, Queensland, Australia was uniformly packed to four treatments of different bulk densities (0.95, 1.15, 1.25, 1.35 Mg m–3) in pots of 0.24 m diameter and 0.22 m deep. Each pot was inoculated with 12 earthworms (equivalent to 300 m–2) and maintained close to field capacity water content for 3 months, after which selected soil physical (dry bulk density, penetration resistance, water infiltration), worm activity (cast production, worm weight) measurements and image analysis were carried out. Results showed that worm numbers were maintained at the initial levels in all the treatments except in the 1.35 Mg m–3 treatment, where there was a 33% decrease. The weight of surface casts per surviving worm was the greatest in the 1.35 Mg m–3 treatment compared to the lower density treatments. Final soil density was lessened in all treatments to a depth of 0.2 m. Surface cast production was positively correlated with the percentage reduction in bulk density. The greatest percentage reduction in bulk density was in the 1.35 Mg m–3 treatment and was equivalent to a doubling of soil aeration (to 18.4%). Penetration resistance to the 0.2-m layer was also reduced and values were less than 2 MPa. Slumping of the surface soil was evident in both the lowest and the highest bulk densities resulting in low rates of water infiltration. Image analysis supported the soil physical properties showing an abundance of both fine pores and worm channels in the three lowest bulk densities, and lesser activity (concentrated in the immediate soil surface) in the 1.35 Mg m–3 treatment.