Lime [calcium carbonate (CaCO3)] has been used for acid soil amelioration of acid soils in Australia and elsewhere, but its effects on soil physical properties are not clear. Mechanisms responsible for the beneficial changes in the soil physical and structural properties of an acidic hardsetting soil in southern NSW, Australia, as a result of lime application were investigated. Changes in water-stable aggregation, a mechanical property, were related to changes in physicochemical properties, and soil organic carbon forms as a result of liming. The improved soil structure due to liming can be explained in terms of reduction in SAR (Sodium absorption ratio) and increase in EC (Electrical conductivity) (both lead to less dispersion) as well as increases in labile carbon (less slaking). The combined effects of reduced dispersion and slaking were responsible for the reduced bulk density and tensile strength of the hardsetting surface soil. These beneficial effects of liming on soil structural and physical properties were detectable 4 years after but not 18 years after lime application.