Effective recycling and reuse of waste tires can play an important role in addressing environmental and health issues with scrap tire landfills. In New Zealand, gravel-rubber mixtures have been considered as seismic-isolation foundation systems for medium-density low-rise buildings. In this context, this paper, unlike previous studies where sand-rubber mixtures were investigated, gravelly soil is mixed with rubber crumbs with various volumetric proportions of 10%, 25%, and 40%. These gravel-rubber mixtures were tested using a medium-size direct shear apparatus under three vertical stress levels: 30 and 60 kPa, and 100 kPa. The effect of rubber crumbs content on the peak shear strength, friction angle, and dilatancy behaviour of gravelly soil is studied. The results indicate a decrease in shear strength and increase in vertical strain corresponding to peak shear stress with increasing rubber content. A significant reduction in dilatancy was also observed with increasing proportion of rubber crumbs in the mixtures.