Contamination or fouling of rail ballast with external fines, including slurried and pumped subgrade material (e.g. clay and silt), is one of the primary reasons for track deterioration. Fouling causes differential settlement of the track, and also decreases the load-bearing capacity, owing to the reduction in the friction angle of the granular assembly. In certain circumstances, fouled ballast needs to be cleaned or replaced to maintain the desired track stiffness, load-bearing capacity and track alignment, all of which influence safety. This paper presents and discusses the results of a series of large-scale triaxial tests conducted on latite basalt, a rail ballast of volcanic origin, commonly used in Australia. Consolidated drained triaxial tests were conducted under three different levels of confining pressure and varying degrees of clay fouling. Stress-strain degradation characteristics are discussed in detail. This paper also describes the non-linear strength envelope and a novel empirical relationship to capture the detrimental effects of clay fouling on the performance of ballasted tracks.