The new Mechanistic-Empirical Pavement Design Guide (MEPDG) uses the subgrade resilient modulus (MR) as the key input parameter to represent the subgrade soil behavior for pavement design. The resilient modulus increases with an increase in confining pressure, whereas, for an increase in deviatoric stress, it increases for granular soils and decreases for fine-grained soils. The value of MR is highly stress dependent, with the stress state (i.e., bulk stress) a function of the position of the materials in the pavement structure and applied traffic loading. Applying excessive vertical stress at the top of the subgrade without knowing the appropriate stress state can result in permanent deformation. In situ stress must be calculated so the correct resilient modulus can be determined. To facilitate the implementation of MEPDG, this study develops a methodology to select the appropriate subgrade resilient modulus for predicting rutting and IRI. A comprehensive research methodology was undertaken to study the effect of in situ or undisturbed subgrade MR on pavement performance using the MEPDG. Results show that MR obtained from in situ stress is approximately 1.4 times higher than the MR estimate from NCHRP-285. Thus, the in situ stress significantly affects the calculation of subgrade MR and, subsequently, the use of MR in the predicted rutting, with IRI using the AASHTOWare pavement mechanistic-empirical design. Results also show that the pavement sections were classified as in “Good” and “Fair” conditions for rutting and IRI, respectively, considering in situ MR.