A fine-grained gypsum-rich clayey soil having a gypsum content of 33% is subjected, in CBR moulds, to modified American association of state highway and transportation officials compaction at optimum moisture content. Two sets of samples were prepared. The first set remained unsoaked, while the second was soaked in fresh water for 120 days. From each CBR sample, three specimens were extracted for unconsolidated undrained triaxial test and the Mohr–Coloumb failure envelopes were obtained for soaked and unsoaked conditions. Soaked samples suffered a significant drop in both cohesion and angle of internal friction. The ultimate bearing capacity of a strip footing was calculated for each of soaked and unsoaked conditions revealing the critical region. For important structures on gypsum-rich soil, the paper shows that the allowable bearing capacity should be based on soaked condition. Based on unsoaked conditions, a safety factor of 8 is required to assure a safety factor of 3 based on soaked condition. For less important structures in regions of hot dry climate with low probability of soaking, safety factors of 4 and 3, based on unsoaked conditions, are required to give safety factors of 1.5 and 1.1 based on soaked conditions, respectively.