Several soil stabilization techniques have been adopted to favorably modify the geotechnical properties like hydraulic conductivity, strength, and compressibility of soil. In this study, xanthan gum (XG), an anionic bacterial extracellular polysaccharide is used to modify the geotechnical properties of the soil, particularly its strength and hydraulic conductivity. The addition of xanthan gum to soil improves its strength and stiffness and also decreases its hydraulic conductivity. The addition of xanthan gum induces polymer cross-linking, forms interconnected network of hydrogels in the voids of the soil matrix and causes preferential adsorption of the biopolymer molecules and cations on the soil surface. These interactions between the soil and the biopolymer alter the geotechnical properties of the treated soil matrix favorably. The decrease in permeability is nearly 1000 times with a small addition of 0.25% xanthan gum to the soil. Xanthan gum tends to aggregate the particles at lower concentration and at higher concentrations forms more viscous hydrogels that fill the pore spaces and clogs the pores. Strength also shows a similar increase and hence xanthan gum can be recommended for soil stabilization.