Termite activities and their interaction with soil environment have defined and modified ecosystems for ages. Termites, as detrivores, are one of the most important insect groups in the Australian environment whose activities and interactions with soil result in significant temporal and spatial changes, formations or modifications of soil, vegetation and landscape. Their influence is largely through their activities in searching and acquisition of food and construction of nests, galleries, soil sheetings and mounds. Their associated symbiotic relationship with actinomycete bacteria, depending on the species, also influences the soil and contributes to soil rehabilitation and plant diversity. Termite interaction with soil depends on soil type, moisture and organic matter content in different seasons and climatic regions. Other key factors affecting this interaction include termite species, size range and morphological characteristics with in a colony. This paper reviews mechanisms of soil and water transport by individual and colonies oftermites, their preferences and reactions to specific factors, and their effect on selected key soil physical and chemical properties as well as microbial activities.