A laboratory incubation study was conducted using 10kg of soil collected from the experimental field of Farming System Research Station, Kottarakara, South Kerala, India, during 1999-2000. The soil belonged to the taxonomical class Plinthic Kandiustult. The soil was acidic in reaction with low values for available nitrogen, phosphorus and potassium as well as micronutrients viz.zinc, copper and manganese. An important feature of infertility of laterite soils is the occurrence of multiple deficiencies of nutrients coupled with poor physico- chemical properties. So an attempt was made to study the effect of naturally available and cheaper material viz khondalite on the physico- chemical properties of soil. Khondalites are quartz- feldspar- sillimanite gneisses, with graphite, garnet and biotite, ± cordierite. Khondalite is a regional rock name. The experiment was in Completely Randomised Design with 11 treatments and three replications. Finely powdered khondalite powder was applied at different rates ie at 0.5, 1.0, 2.0, 3.0 tons ha^-1 either alone or in combination with different materials like lime, steatite, sodium chloride, farm yard manure at 12.5 tons ha-1 etc, and compared with the control, soil alone. The nutrient release was monitored for a period of 10 months. It was found that there was a gradual increase in the available N content in all the treatments over time. The available nitrogen content increased from 244.69 to 442.50 kg ha^-1 at the end of the tenth month. In the case of available phosphorus content, the initial level of 9.72 increased to 10.42 kg ha^-1 at the end of tenth month. But in the case of available potassium, there was a gradual decrease from 256.63 in the first month to 83.08 kg ha^-1 at the end of tenth month. In the case of copper, the highest mean value was 2.32ppm was recorded when khondalite was applied at 1 ton ha^-1 along with sodium chloride. The highest available manganese content of 25.21ppm was observed in the first month itself which decreased over time to reach a value of 21.11 at the end of sixth month. The initial available zinc content of 2.57 was reduced to 2.21ppm at the end of sixth month which showed that maximum solubilisation took place during the first month itself. Available iron content decreased gradually from 26.64 ppm to a value of 23.04 ppm at the end of sixth month. The release of N and P from khondalite was found to increase over time where as K release was maximum during the first month. The content of available Zn, Mn, and Fe were found maximum in the soil immediately after application. Soil physical properties were also studied at the end of experiment. It was found that application of khondalite@1ton ha-1 recorded the lowest bulk density of 1.10Mg m^-3. The lowest particle density of 2.33 was recorded where khondalite was applied at 2 ton ha-1. The highest porosity and water holding capacity were recorded when khondalite was applied at 0.5 and 1 ton ha^-1 respectively along with lime. The best treatments from the study were selected and a field experiment was conducted using cassava as the test crop during 2001-2003. The results showed that 25-50% of the recommended dose of chemical fertilizer can be substituted with khondalite without affecting yield, wherever it is locally available.