Unavailability of aggregates, in plains of Pakistan, has compelled to find alternative economical materials of building construction. Efforts are being made to introduce Reinforced Baked Clay (RBC) panels of beams as a substitute for Reinforced Cement Concrete (RCC) to build low cost houses. However, shrinkage and reduced compressive strength of baked clay beams is an obstacle. This paper presents optimum compactive pressure to be applied to clay beams during casting to reduce shrinkage and to achieve maximum possible compressive strength. For this purpose, clay beams were cast and compacted at 0 to 7 MPa in drained state. Shrinkage of beams and compressive strength of cubes was determined. The results show that (i) shrinkage of clay beams reduced from 8 to 1.25 % at compactive pressure of 2 MPa, and 6 MPa, respectively, and (ii) the compressive strength of both the unbaked and baked clay increased by increasing compactive pressure on clay beams during casting. However, there was no significant difference in compressive strength of clay beams when compressed at pressure from 6 to 7 MPa. The compressive strength of baked clay obtained at optimum compactive pressure of 6 MPa was 35 MPa, which is about 1.7 times higher than that of M20 grade concrete.