The technique of carbonated stabilization is an innovative method to improve the engineering performance of soft soils. However, the improvement in the engineering performance of stabilized soils with carbonized steel slag has not been studied. In addition, the effect of clay minerals on carbonation parameters and D-W cycle performance remains unknown. To this end, in this paper, three types of synthetic soils containing different clay minerals were prepared to be stabilized by carbonated steel slag. The strength performance and microstructural evolution of carbonated steel slag stabilized soils were investigated by drying-wetting (D-W) cycle tests, unconfined compression strength (UCS) tests, X-ray diffraction (XRD), thermogravimetry (TG), and scanning electron microscopy (SEM). The results showed that the compressive strength after and resistance to D-W cycles of carbonated steel slag stabilized soils were significantly improved due to carbonation treatment. The presence of clay minerals in stabilized soils led to the high values of optimum moisture content for carbonation (C-OMC). The C-OMC value of stabilized soils containing montmorillonite was higher than that of stabilized soils containing kaolinite. Montmorillonite had a higher negative effect on the D-W cycle performance of soils compared to kaolinite. This fact could be reflected by the fluctuation of UCS and mass change ratio (Rm). The main carbonation product by three types of carbonated steel slag stabilized soils was calcite, which remained stable after D-W cycles. After carbonation for 18 h, the generated calcite and carbonation degrees for three types of stabilized soils were obtained. In the microstructures of carbonated steel slag stabilized soils, the spindle-like clusters of the generated calcite appeared, which adhered to the surface of mineral particles. The aggregated degrees of the generated calcite in stabilized soils containing clay minerals tended to decrease after D-W cycles. In this work, a new type of carbonated steel slag stabilized soil was studied. The results indicated that the effect of clay minerals on the engineering characteristics of soil should be considered. •Carbonated steel slag is used to stabilize three types of artificial soils.•Influence of clay minerals on performance and microstructure of carbonated steel slag stabilized soils is investigated.•The existence of clay minerals leads to increasing values of the optimum moisture content for carbonation.•The main carbonation product is calcite which remains to be stable after drying and wetting cycles.