The relationship between compaction conditions and soil engineering performance has been studied for decades, yet a fundamental gap persists: the coupled effect of compaction energy and moisture content on soil fabric, and its simultaneous influence on hydraulic conductivity and shear strength, has not been examined in a single integrated study. Conventional compaction specifications define target dry density and optimum moisture content (OMC), with no direct account of the microstructural state — or fabric — that these conditions produce. Soil fabric, encompassing particle arrangement, pore structure, and interparticle bonding, is the primary variable controlling both permeability and cohesive strength in fine-grained soils. Bridging this gap requires an experimental framework that treats fabric as a quantifiable mediating variable rather than an implicit, uncharacterised outcome of the compaction process. This study compacted a low-plasticity clay (CL; LL = 38%, PI = 17%, Gs = 2.68) across nine states defined by three energy levels (low, medium, high) and three moisture conditions (dry of OMC, at OMC of 17%, and wet of OMC). Soil fabric was characterised indirectly through a dimensionless Fabric Index (FI) derived from normalised dry density and void ratio. Saturated hydraulic conductivity was measured by falling head permeability tests, and cohesion (c) and internal friction angle (φ) were determined from drained direct shear tests using the Mohr–Coulomb criterion. Dry density ranged from 1.62 g/cm©¯ to 1.80 g/cm©¯ and the FI from 0.38 to 0.63, with peak values consistently recorded at OMC. Hydraulic conductivity decreased with increasing compaction energy, reaching a minimum of 9.5 °ø 10−8 m/s at high energy and OMC — five times lower than the maximum of 4.8 °ø 10−7 m/s at low energy on the dry side. Cohesion rose from 18 kPa to 38 kPa in close accordance with the FI, while the internal friction angle remained practically invariant (25.2°∆– 27.8°∆). A significant inverse correlation between FI and hydraulic conductivity, combined with a strong positive correlation between FI and cohesion, confirms a coupled hydraulic–mechanical response governed by fabric state. The results establish that soil fabric, rather than bulk density alone, is the key variable mediating compaction-induced changes in both permeability and shear strength. Compaction at OMC under the highest applicable energy simultaneously minimises permeability and maximises cohesive strength. The Fabric Index proposed herein provides a practical, imaging-free descriptor for fabric-aware compaction control, with direct relevance to earth dams, embankments, pavement subgrades, and compacted liner systems.