Expansive soils in the field are typically exposed to cyclic wetting and drying due to climatic fluctuations and subjected to a variety of stress conditions in nature or when used as compacted layers for the construction of hydraulic barriers or waste disposal facilities. The hysteric behavior of the soil-water characteristic curve (SWCC) is a key parameter for understanding, modeling, and interpreting the unsaturated behavior of these soils under such conditions. This study investigates the effect of stress states on the hysteresis behavior of soil-water characteristic curves (SWCCs) for compacted highly expansive clay over a range of matric suction between 0 and 1500 kPa. Two test series were performed, the first test series investigated the effect of stress states on the hysteresis of SWCCs during a single drying-wetting (DW) cycle. The second test series studied the combined effect of stress applied and multiple drying-wetting cycles on the SWCC hysteresis. For the sake of comparison, the overall SWCC hysteresis due to drying-wetting cycles was quantified using the average degree of hysteresis in terms of volumetric water content (ADHθ). Furthermore, contributors to the observed hysteresis were defined using two newly proposed measures; namely, average degree hysteresis in terms of gravimetric water content (ADHw) and in terms of volume change (ADHe*). The outcomes of this study indicate that consideration of stress states on the hysteresis of SWCC for expansive clay is of great importance. The results show a dual trend for the variation of ADHθ with applied vertical stress. Furthermore, multiple DW cycles induced a significant reduction in the hysteresis (ADHθ) under low- and high-stress states up to a certain level of DW cycles, then, no further changes in the hysteresis trend were detected. It was also found that hysteresis loops under a low-stress state were concentric in shape while hysteresis loops for specimens under a high-stress state were non-concentric, with a downward shift in hysteresis loops with the increase in DW cycles.