Expanded polystyrene molded–beads (EPS), often known as Geofoam, have been used as a geotechnical alternative material in a variety of applications across the globe. It has been used for backfilling retaining walls and embankments with both vertical and sloped sides, as well as for retaining walls and embankments with vertical sides. Geofoam material has many advantages such as, compressibility, light weight, low density, a high strength-to-weight ratio, very little or no lateral expansion under compression load, and cost effective. The efficiency of EPS geofoam compressible inclusions in lowering lateral earth pressures acting on retaining walls is discussed in this work. The effect of geofoam (as a backfill) height, length, and density in reduction of internal actions imposed on retaining walls with different types of soil (clay and coarse sand) has theoretically investigated by FEM PLAXIS program version 8.6. The results have given reasonable reduction of earth pressure comparing with full scale cantilever retaining wall.