The Chaco leaf-cutting ant Atta vollenweideri is native to the clay-heavy soils of the Gran Chaco region in South America. Because of seasonal floods, colonies are regularly exposed to varying moisture across the soil profile, a factor that not only strongly influences workers' digging performance during nest building, but also determines the suitability of the soil for the rearing of the colony's symbiotic fungus. In this study, we investigated the effects of varying soil moisture on behaviours associated with underground nest building in A. vollenweideri. This was done in a series of laboratory experiments using standardised, plastic clay-water mixtures with gravimetric water contents ranging from relatively brittle material to mixtures close to the liquid limit. Our experiments showed that preference and group-level digging rate increased with increasing water content, but then dropped considerably for extremely moist materials. The production of vibrational recruitment signals during digging showed, on the contrary, a slightly negative linear correlation with soil moisture. Workers formed and carried clay pellets at higher rates in moist clay, even at the highest water content tested. Hence, their weak preference and low group-level excavation rate observed for that mixture cannot be explained by any inability to work with the material. More likely, extremely high moistures may indicate locations unsuitable for nest building. To test this hypothesis, we simulated a situation in which workers excavated an upward tunnel below accumulated surface water. The ants stopped digging about 12 mm below the interface soil/water, a behaviour representing a possible adaptation to the threat of water inflow field colonies are exposed to while digging under seasonally flooded soils. Possible roles of soil water in the temporal and spatial pattern of nest growth are discussed.