As part of an urbanization scheme, artificial islands are being created on the swampy land around the Itaipu lagoon, close to Rio de Janeiro. The islands are being formed by hydraulic filling with sand and their periphery consists of retaining walls resting on sand cushions. The very soft local soils pose settlement and stability problems in execution and operation.A site and laboratory investigation program, involving several types of triaxial, consolidation, and in-situ vane tests, has been carried out and is described. A full-scale instrumented settlement fill has been built and is mentioned. An instrumented 5 m deep trial trench has been carried out and monitored during the excavation stage which took 5 days and during a 45 day long repose stage. In both these stages failure was avoided by keeping water inside the trench at its original level. Finally, failure was induced by pumping water out of the trench. The observations at the trial trench are presented and discussed in some detail.