Beiyuan is a loess tableland in northeast of Linxia county, Gansu province, where the soil deposit is typical Malan loess（Q3 ）. After 2008 Weuehuan Ms8.0 earthquake, cases of serious subsidence of loess ground were found within several mouths and caused substantial loss in economic. In this paper, the causes and mechanism of these large-scale subsidence of loess are analyzed through field investigation and laboratory test. It is believed that water seepage through channels which formed by connection of surface cracks developed during Wenchuan earthquake with vertical fissures in loess is the main cause. In the water seepage, water accumulates on the impermeable layer at the bottom of loess layer, and the loess partially collapsed from the bottom to the surface. To prevent such hazard, some treatment methods considering the economic condition and local suitability are proposed.