Lime treatment is a widely used method for improving the performance of soft subgrades. However, this method introduces unique compaction challenges that are significantly different from those of untreated subgrades. Current studies primarily focus on the chemical reactions and strength development of lime-treated soils, whereas the mechanical evolution of lime-treated subgrades during the dynamic compaction process remains underexplored. This study investigates the key factors, such as lime content, water content, degree of compaction, and curing period, that affect the compaction characteristics of lime-treated soft subgrades. Both compositional and microscopic analyses were conducted to elucidate the influence of lime treatment on the mechanical properties of soft subgrades. Subsequently, in situ measurements were performed using earth pressure cells embedded within multiple layers of lime-treated subgrades to evaluate the earth pressure distribution during compaction. The results indicated that a high-modulus layer formed at depths between 10 and 25 cm after two passes of vibratory compaction. This layer significantly alters the distribution of the vibratory compaction force, leading to an attenuation of the roller-induced stress with depth. Consequently, the compaction energy dissipates rapidly, making it difficult to penetrate depths beyond 25 cm. These findings indicate the intrinsic link between lime-induced stiffness evolution and compaction stress transmission, providing new insights into the compaction mechanism of lime-treated soils and offering a scientific basis for optimizing compaction strategies in practice.