Reductions in water content after construction can produce desiccation cracking and associated aggregation of clay barriers. This produces two flow regimes within the clay barrier. Conduit flow occurs through the desiccation cracks (preferential flow paths), and matrix flow occurs through the aggregates (intact matrix). An investigation of the effect of post compaction water content variations on volumetric strain and saturated hydraulic conductivity of desiccation produced aggregates was conducted. Kaolinite samples for use in flexible wall permeameters were prepared using modified, standard, and reduced proctor methods. The initial volume and hydraulic conductivity of each sample were determined. Each sample was progressively dried back from its molding water content, and its volume and hydraulic conductivity were determined after each dry-back. Correlations between gravimetric water content, dry bulk density, volumetric strain, and saturated hydraulic conductivity were made. Significant volumetric strain occurred, which produced a decrease in the hydraulic conductivity (matrix flow) of the intact aggregate. The strain, however, while resulting in a lower matrix flow in the aggregates, should produce a higher overall flow in barriers due to conduit flow within the resulting desiccation cracks.