Lime Stabilization is one of the common methods to increase the bearing capacity and reduce deformation of weak subgrade soils. Considering the increase in the bearing capacity of the subgrade soil after lime stabilization, it is important to determine the effect of lime stabilization on the pavement life extending from the perspective of pavement design. In this study, the pavement fatigue and rutting life-extending benefits of hydrated lime stabilization of a clay subgrade soil are investigated. A weak high plasticity clay (CH) soil is considered for the subgrade soil. The analysis is conducted using the nonlinear mechanistic-empirical method with three different lime percentages of 3, 6, and 9%, stabilization depths of 15, 30, and 45 cm, and average climatic temperatures of 0, 25, 40 °C. Four different pavement cross-sections were considered and analyzed at different lime percentages, stabilization depths, and climatic temperatures using the nonlinear pavement analysis program, NonPAS. In the analyses, a linear elastic behavior was assumed for the asphalt mixture, and the granular base, stabilized subgrade and the natural subgrade were all assumed to behave nonlinearly using the ‘Universal’ model. Results showed that subgrade stabilization improves the rutting life more significantly than the fatigue life. Also, it was revealed that increasing the stabilization depth is most beneficial in increasing the fatigue life for pavements with thinner bases and improving the rutting life for pavements with thinner Hot Mix Asphalt (HMA) courses. It is shown that the optimum lime stabilization is 6%, and the subgrade soil stabilization in 0, 25, and 40 °C will result in the overall pavement life improvement of 27–172%, 22–568%, and 7–1040%, respectively. Therefore, subgrade stabilization in warmer climates is shown to be more beneficial. Also, this research confirms that for effective lime stabilization of subgrade soil, the minimum stabilization depth should be considered more than 30 cm.