The application of a compaction pressure to an unsaturated soil results in the development of shearing stresses at the points of contact between soil particles until the contacts fail. The particles then slide over one another with an increase in density. The compaction characteristics of soil are thus controlled by the shearing resistance of these contacts. The shearing strength is a function of the effective normal stress. When the compaction pressure is applied to a dry soil, the effective stress is approximately equal to the total stress, because the χ-coefficient is small. The addition of water increases the degree of saturation and increases the pore pressures, thus weakening the soil. Hence, the soil deforms more under stress, and higher densities result. The density must increase during compaction until the total stress, the pore-air pressure, and the pore-water pressure combine to give the required effective stresses. The theory is qualitative because little is known of the dynamic stress-strain properties of unsaturated soils.