When using potting soil, it is better to reserve it for container plants rather than for your lawn. Potting soil contains a combination of peat moss, compost, vermiculite or perlite and perhaps pasteurized soil. Although it won't hurt your lawn, it is far more expensive and less beneficial than other soil amendments.
Potting soils vary in quality, according to Colorado State University, depending on the ingredients. Products containing sedge peat have poor drainage and aeration. Select products that contain a combination of sphagnum peat moss, perlite, vermiculite or compost. The more expensive products usually perform better. If you choose to put potting soil on the lawn, select a high-quality product.
The ingredients in potting soil provide a lightweight growing medium for plants in containers because regular garden soil is too heavy and may contain pathogens. Vermiculite, perlite and peat moss hold moisture so containers don't dry out. Lawn soils don't have the same needs as potted plants. Lawns need a loose, loamy soil with plenty of nutrients and organic matter.
Buy high-quality potting soil or make your own by mixing equal parts peat moss, vermiculite or perlite and pasteurized soil, with a few handfuls of rotted manure or compost. To pasteurize soil place 1 lb. of soil in a plastic zip-top bag. Microwave it for two minutes. Seal the bag and allow it to cool. The heat kills any pathogens present in the soil. Use potting soil to grow potted perennials, annuals, houseplants and vegetables. Do not spread old potting soil on the lawn or reuse it to establish new container plants. Compost old potting soil or dispose of it.
Topdressing is the practice of spreading a thin layer of soil amendment on the lawn. As the soil amendment breaks down, it adds humus to the soil, which improves texture and drainage. Compost is the recommended material for topdressing, although you could use potting soil instead. Compost is richer in organic matter and nutrients than potting soil. Order it in bulk and spread small piles of it throughout the lawn in early fall or spring. Rake the piles over the lawn surface, so the lawn has 1/2 inch layer of compost throughout. You'll need approximately 3/4 cubic yard per 1,000 square feet of lawn.