Expanded polystyrene (EPS) geofoam panels of low stiffness installed vertically against the rigid nonyielding retaining structure provide additional deformations in the backfill. This behavior will lead to the mobilization of a greater portion of the soil strength, thus decreasing the lateral earth thrust acting on the rigid retaining wall. This study addresses the effect of geofoam compressible inclusion on lateral earth thrust acting on a rigid nonyielding retaining wall by small-scale model tests and numerical analyses. The finite-element code used in the numerical modeling is validated against the stress measurements on a 0.7-m-high wall model. Significant reduction is observed in the lateral earth pressures attributable to deformations concentrated at the lower half of retained soil mass. The effects of compressible inclusion thickness, relative stiffness of the EPS geofoam, and strength parameters of the backfill on lateral earth thrust acting on rigid nonyielding walls are investigated by a series of numerical analyses performed by using the verified finite-element model. Relative thickness and stiffness of the inclusion have the major roles in the reduction of the lateral earth thrust. Increase in soil strength (i.e., internal friction angle of the cohesionless backfill) has a positive effect on the isolation efficiency that becomes more pronounced for a thicker geofoam inclusion. The presence of a less-stiff layer of geofoam within the upper midheight of the retaining wall provides improvement in load isolation performance because deformations associated with the lateral compression of the softer inclusion within this zone lead to mobilization of additional shear resistance in the retained soil mass. DOI: 10.1061/(ASCE)MT.1943-5533.0000348. (C) 2011 American Society of Civil Engineers.