Soil nailing has been widely used to stabilize slopes across the world over the last decades and is currently one of the predominant methods used for upgrading fill slopes in Hong Kong. The behavior of the soil nails in fill slopes has been investigated by experimental and numerical methods. However, the influence of rainfall infiltration on the reinforced fill slopes by soil nails was not investigated in existing studies. In addition, the stabilizing mechanism of the use of soil nails in fill slopes under rainfall condition is not yet understood thoroughly. The objectives of this study, therefore, are to explore the response of steep fill slopes to rainfall infiltration and the mechanism of soil nails in improving slope stability and reducing slope deformation. A series of two-dimensional numerical simulations where a hypoplastic constitutive model was used to model the strain-softening behavior of fill slopes was carried out. The numerical results show that a potential slide is developed in the unreinforced fill slope and thus slope failure may occur initiating from the toe of slope. Due to the presence of soil nails, both shallow failure and deep-seated failure are prevented in the soil nail reinforced slopes. The soil nails greatly limit the displacement of slope and the formation of potential slide in the slope. The tensile forces in the soil nails are mobilized through the effective interaction among soil nails, nail heads and surrounding soil when a potential slide is being initiated. The nail heads transfer the earth pressure of the overlying soil layer to the soil nails in question, causing the decrease of soil stress around the nail heads. The results also demonstrate that the interface friction between nail and soil can influence the stabilizing effect. Therefore, it is necessary to ensure sufficient interface friction to make the soil nails effective in transferring earth pressure and reducing slope deformation. However, once the friction coefficient between nail and soil reaches a threshold value, the interface friction will no longer be the key factor for the slope stability.