Review of the literature related to the mixture of shredded tire and sand shows that, despite of the increase in shear strength due to addition of tire chips, granulated rubber causes reduction in shear strength of sand. In this study, the shear behavior of mixtures of fine-grained sand and 1–5 mm granulated rubber is investigated. Sixty direct shear tests were conducted on sand–granulated rubber mixtures with various rubber contents (0%, 5%, 10%, 20% and 30%) at different relative densities (50%, 70% and 90%) and different normal stresses (34.5 kPa, 54.5 kPa, 74.5 kPa and 104.5 kPa). The obtained results show that the granulated rubber improves the shear strength of fine-grained sand at medium relative density and low normal stress. The degree of improvement in shear strength is a function of rubber content, relative density and normal stress. The results show that at relative density of 50%, by adding 5% granulated rubber, the internal friction angle of sand increases from 35.1° to 39.2°. However, at relative densities of 70% and 90%, addition of granulated rubber to sand decreases its internal friction angle. The results also indicate that the behavior of sand becomes more ductile with increasing granulated rubber content. Adding granulated rubber leads to greater yielding strain and less tangent stiffness of sand. The maximum dilation angle decreases with the decrease in granulated rubber content. The stress ratio of sample at critical state (ψ = 0°) decreases with increasing granulated rubber content.