Soft to medium clay soil possesses major sources of damages to the pavement layers overlying them because of their potential failure under moisture changes and external heavy traffic load. In such situations, soil stabilization methods can be used to improve the soil properties and satisfy the desired engineering requirements. This study presents the use of sugarcane bagasse ash (SBA) and lime as chemical stabilizers for a clay soil subbase. Sugarcane bagasse ash and lime are used individually and as mixtures at varying percentages to stabilize a clay soil from Taxila, Pakistan. Various geotechnical laboratory tests such as Atterberg limits, compaction test, and California Bearing Ratio (CBR) are carried out on both pure and stabilized soils. These tests are performed at 2.5%, 5%, and 7.5% of either SBA or lime by weight of dry soil. In addition, mixtures of lime and SBA in ratios of 1:1, 2:1, 3:1, 1:2, and 1:3 are used in 5%, 7.5%, and 10% of dry soil weight, respectively. Results indicate that soil improved with 7.5% SBA showed a 28% increase in the liquid limit, while soil mixed with 2.5% lime in combination with 7.5% SBA showed an increase of 40% in the plastic limit. For the plasticity index, the soil mixed with 7.5% SBA showed an increase of 42%. Moreover, 2.5% lime in combination with 2.5% SBA showed the best improvement in soil consistency as this mixture reduced the soil plasticity from high to low according to the plasticity chart. Furthermore, 2.5% SBA in combination with 5% lime demonstrated the largest improvement on the CBR value, which is about a 69% increase above that of the pure soil. Finally, the cost analysis indicates a promising improvement method that reduces pavement cost, increases design life, and mitigates issues of energy consumption and pollution related to SBA as a solid waste material.