Rainfall-induced seepage and the deterioration of soil mechanical properties are key triggers for the instability of support structures or the overall deformation of excavations. Laboratory model tests were conducted, utilizing digital image correlation (DIC) to analyze the soil displacement field within the excavation, ground surface settlement, soil displacement behind retaining piles, and crack propagation dynamics. A three-dimensional numerical model that accounts for the hydro-mechanical degradation of unsaturated soils was developed using a coupled computational fluid dynamics-discrete element method (CFD-DEM). By integrating macroscopic deformation observations with meso-mechanical analysis, the dynamic evolution of the soil slip loss rate, force chain networks, and the anisotropy of contact fabric were investigated. The results show that under rainfall infiltration, and constrained by the pile-anchor system, the excavation exhibits progressive failure. The inclination of the potential slip surface relative to the horizontal plane initially decreases and then increases. As rainfall continues, the effectiveness of the support structure gradually attenuates, leading to the continuous expansion of a wedge-shaped sliding mass that develops behind the piles and moves into the excavation. The soil slip loss rate increases significantly with rainfall duration. Furthermore, variations in the quantity, orientation, and fabric anisotropy of strong force chains among soil particles elucidate the dynamic evolution of the excavation’s failure path.