Abstract: In view of the industrialisation of northwestern China, widespread research was undertaken on the properties of loess in this area. This paper deals with a part of these investigations.A brief report is given on the distribution of loess in China and their aeolian origin. A microstructure model of Chinese loess is suggested, which can explain its collapsible behaviour and the sensitivity of the mechanical properties of macroporous loess to slight changes of the water content. It is emphasised that the physico-chemical and mechanical properties of loess are mainly governed by the granular fraction <5μm, which contains illites, montmorillonites and soluble salts. Results of physico-chemical and mineralogical investigations are presented and analysed. The fundamental mechanical properties of loess were determined by oedometer, triaxial, rheological and permeability testing. Conclusions and suggestions are presented for practical engineering.