The shaft capacity of piles in sand subjected to cyclic (wave) loading has been observed to decrease significantly with loading cycles (Poulos, 1989). A number of researchers (Boulon and Foray, 1986; Tabucanon et al., 1995; Shahrour et al., 1999) have replicated the characteristics of the load transfer degradation behavior in the laboratory through cyclic interface shear testing with a constant normal stiffness confinement condition (Vesic, 1972). However, no consensus currently exists as to the primary microscale mechanisms that govern cyclic interface shear behavior and load transfer degradation. A research program was undertaken to quantify the contribution of soil properties, cementation, confinement condition, and displacement mode, in load transfer degradation. Monotonic and cyclic interface shear tests were performed using a modified interface direct shear device with a Perspex side window. The specimen particle displacement fields were quantified during selected cycles by capturing high resolution digital images (1600 x 1200 pixels) and using Particle Image Velocimetry (White et al., 2001a). Results indicate that the confinement condition, which is intended to replicate the elastic response of the far-field soil, is of primary importance as it allows for normal stress relaxation with soil contraction adjacent to the interface. The displacement magnitude, particle characteristics, and particle-particle cementation were also observed to affect the magnitude and rate of degradation. It is anticipated that these findings will provide a fundamental rationale to identify field conditions where shear stress degradation is likely to occur and a basis from which more rigorous models may be developed.