Sandy red clay, abundant in clay minerals, exhibits a marked sensitivity to variations in water content. Several of its properties are highly prone to deterioration due to wet–dry cycling, potentially leading to slope instability. To investigate the multi-scale deterioration patterns and the underlying chain mechanism of sandy red clay subjected to wet–dry cycles, this study conducted systematic tests on remolded sandy red clay specimens through 0 to 5 wet–dry cycles, with the number of cycles (N) as the variable. The study’s results indicated the following, under wet–dry cycling: (1) Regarding the expansion and shrinking properties, the absolute expansion rate (δ_a) progressively increased, whereas the absolute shrinkage rate (η_a) gradually decreased. Concurrently, the relative expansion rate (δ_r) and relative shrinkage rate (η_r) gradually declined. (2) At the microscale, wet–dry cycles induced significant changes in the microstructure, characterized by increased particle rounding, disrupted stacked aggregates, altered inter-particle contacts, enlarged and interconnected pores, increased number of pores, and a reduction in clay mineral content. (3) At the mesoscale, cracks initiated and propagated. The evolution of cracks undergoes stages of initiation stage, propagation stage, and stable stage, and with the crack rate increasing to 2.0% after five cycles. (4) At the macroscale, the shear strength exhibited a continuous decline. After five cycles, cohesion decreased by as much as 49.6%, whereas the internal friction angle only decreased by 4.3%. This indicates that the loss of cohesion was the primary factor contributing to the strength deterioration. (5) A 19.4% decrease in the slope factor of safety (F_v) occurred after five cycles. This reduction was primarily attributed to the decrease in material cohesion and the upward shift in the potential sliding surface. Under the influence of wet–dry cycles, slope failures typically transitioned from overall or deep sliding to localized or shallow sliding.

Slope stability analysis requires particular attention to groundwater effects, where seepage–stress coupling fundamentally alters mechanical responses. This investigation develops a field-calibrated numerical model using monitoring data from a water diversion project in Yunnan, using finite element analysis based on seepage–stress coupling theory. Comparative stability assessments through strength reduction methodology evaluate three scenarios: non-seepage conditions, seepage–stress interaction, and cutoff wall implementation. Results demonstrate the cutoff wall’s effectiveness, achieving optimal slope ratios of 1:1.41 compared to 1:2.21 under seepage–stress coupling. Parametric analyses reveal quantitative relationships between wall characteristics and stability metrics. Elastic modulus optimization within practical ranges (9362.63 MPa peak performance) enables steeper 1:1.37 slopes while maintaining safety factors. Strategic width reduction from 0.6 m to 0.4 m decreases concrete usage by 33% without compromising stability thresholds, proving cost-efficiency in large-scale applications. The methodology provides actionable guidelines for deep excavation projects facing similar hydrogeological challenges. Optimized cutoff walls enhance slope stability sustainably through ecological preservation and resource efficiency, providing actionable frameworks for eco-conscious geotechnical design aligned with global sustainability objectives.