Particle size exerts a significant influence on the mechanical behavior of soil. However, insufficient research has been carried out on red clay formations, which are widespread in some Chinese provinces. Here, using unconfined compressive strength (UCS) tests, wetting–drying (WD) tests, and low-temperature nitrogen adsorption tests, we examined the relationship between the particle size and a number of mechanical and microstructural characteristics of a red clay outcropping at a construction site in China. Our results suggest that, depending on the surface area, porosity, particle size, and dry density, the failure mechanism in UCS tests will be different. That is, as the particle size increases, the failure mode of soil changes from split failure into shear failure. In addition, as the dry density increases, the UCS of the soil sample is significantly improved, and its total porosity and fractal dimension decrease. We also evaluated a dependence on particle size and the number of WD cycles on the distribution and size of cracks in WD tests. We conclude by suggesting that particle size, dry density, and WD behavior should all be taken into account in roadbed designs in red clay formations.