The employment of bentonite modified loess (BML) is a common method of constructing the anti-seepage lining of landfills in the loess region of China, and its long-term secure performance is threatened by wetting-drying (W-D) cycles. Taking the remolded loess (RL) and BML with 15% in mass of bentonite as research objects, the W-D cycles test, scanning electron microscope (SEM) test and direct shear test were carried out to analyze the effects of W-D cycles on the microstructure and shear strength of samples. The regression equations between strength and micro-pore structure parameters were established by multivariate linear stepwise regression method. The damage mechanism of BML after W-D cycles was studied by establishing damage degree models based on porosity and cohesion. Results indicate that clay minerals such as montmorillonite in BML absorb water and expand to fill the macropores, resulting in more medium and small pores and more pronounced surface contact of particles. After W-D cycles, the particle arrangement of samples before and after bentonite modification tends to be loose. Both the porosity and fractal dimension increase and tend to stabilize after five cycles. The BML exhibits lower porosity and greater fractal dimension while its cohesion and internal friction angle show more significant decrease after W-D cycles than those of RL. The damage variables based on porosity and cohesion well describe the W-D induced damage of loess before and after modification from macro- and micro-scale perspectives. The damage degree of samples increases with W-D cycles, but the increment decreases.