Fouling refers to the condition of railroad ballast when voids in this unbound aggregate layer are filled with finer materials. As a fouling agent, coal dust coming from coal trains and accumulating in the ballast has become a major concern for railroads. This paper aims to provide a better understanding of adverse impacts of coal dust on railroad ballast drainage and load carrying functions. First, mechanical properties of coal dust were investigated at the University of Illinois through laboratory tests such as grain size distribution, Atterberg limits, specific gravity, moisture-density compaction relationships, and shear strength properties. Then, ballast aggregates were added coal dust at different percentages by weight and moisture contents to represent coal dust fouling in the field. When fouled samples were tested in large direct shear (shear box) equipment, it was found that 25% coal dust by weight of aggregates were enough to fill up all the voids in ballast corresponding to a void ratio of 43%. When the coal dust percentage in ballast samples increased, the ballast shear strength steadily decreased. In the case of ballast fully fouled with wet coal dust at 35% moisture content, the friction angles obtained from the direct shear equipment were close to the friction angle of coal dust itself. This implies that individual aggregate particles within ballast layer would be completely separated by coal dust to most likely cause the worst track instability problems in the field.