Abstract: In order to deeply understand the grain effect of Malan Loess in Yan'an new area and to reveal its collapse mechanism, firstly scanning electron microscope was used to observe the microstructure characteristics of loess, and IPP image processing software was used to analyze quantitatively loess particles. Then, based on discrete element theory, the particle flow PFC^2D program was used to simulate the distribution of the undisturbed loess particles and the interaction between the particles in Yan'an new area under different buried depth. The microstructure structure characteristics of the natural loess were visually reproduced. The relationship among the distribution of particles, the contact force and the collapsibility was analyzed. The results show that the structure strength of soil was determined by the action of the skeleton particles, especially the contact force of aggregate contact was dominant. With increase of depths, the loess skeleton particles transit gradually from point-contact to aggregate structure, the contact force decreased also significantly. The PFC^2D method provides a new idea for the research on the formation mechanism of loess collapsibility.