Gully Stabilization and Highland Protection (GSHP) are useful in preventing gully erosion and have been widely utilized in the Loess Plateau of China. Groundwater rise is an important factor that can lead to loess-filled slope instability. A flume device was designed to study the process of water infiltration into a loess-filled slope and the subsequent failure process of the slope due to groundwater rise. The loess was uniformly infiltrated with water, resulting in preferential seepage via the development of cracks in the slope from settlement deformation. The pore-water pressure increased in the front of the slope and decreased at the back during slope failure, due to contraction in the slope toe and increased tensional at the back of the slope. The failure process of the slope can be divided into three stages, settlement deformation and collapse deformation with vertical displacement during slope settlement, and slope toe slide-flow or regressive failure with a primarily horizontal displacement in the direction of the slope’s free surface. The factors of suffusion erosion, saturated softening, and infiltration dynamics during water infiltration into the loess-filled slope promote slope failure according to experimental data and numerical simulations.