In order to reduce shrinkage cracking, asphalt emulsion was introduced to traditional cement stabilized macadam (CSM) base course materials. The unconfined compressive strength (UCS), indirect tensile strength (ITS), freezing and thawing resistant of CSMs were investigated by laboratory tests. The water loss, dry shrinkage strain and temperature contraction strain of CSMs were measured. The test results indicate that the UCS values of CSMs decrease with increase of the emulsion content. The ITS values fluctuate slightly with the emulsion content. The freezing and thawing resistant ability of CSMs with asphalt emulsion is at acceptable level. Moreover, the influence extent of the emulsion content on these performances is simultaneously predominated by cement content. The dry shrinkage strain and coefficient of CSMs decrease with the increase of the emulsion content. The positive effect of the emulsion on dry shrinkage resistant is attributed to the encapsulation of cement paste by asphalt film. The negative effect of asphalt emulsion on temperature contraction strain can be negligible considering the stress relaxation ability of asphalt binder. In order to maximize strength and minimize cracking in CSM, it is proposed to adjust the emulsion content based on cement content.