Red mud, a by-product of the alumina industry, is disposed through construction of clay lined dams or dykes. Into these constructions, red mud is pumped and allowed to dry naturally. This red mud when disposed is slurry with a solid concentration of 10%, high ionic strength and pH in the range of 10-13. It should be noted that it is toxic in nature at this stage because of the harmful chemical composition present in it. Hence utilization of it in various applications results in decrease of its environmental impact. In the present study, red mud has been used in the construction of a tailing dam. Its stability has been evaluated considering various cases such as end of construction, steady seepage, rapid draw down and seismic conditions. The data from this evaluation has been compared with borrowed soil to assess the compatibility of red mud. The comparison has shown that there is little difference between usage of either borrowed soil or red mud as tailing dam material. However, red mud gives better factor of safety compared to the borrowed soil considered in this study.