Loess and loess-derived soils in the Akaroa harbour area of New Zealand are typically unsaturated and vulnerable to shallow landsliding during rainfall events. In this paper, the water retention properties and unsaturated shear strength of these materials are characterised using laboratory testing and long-term field instrumentation. Because the pore size distribution of the loess is fractal, the laboratory-derived soil-water characteristic curve is described mathematically using a series of power-law relationships. The same soil-water characteristic curve applies to both recompacted and intact loess when suction is normalised by the air entry value. Stress–strain behaviours of the recompacted and intact loess exhibit significant differences, however. The unique microstructure of the intact loess contributes to its larger shear strength. Long-term field instrumentation data, including suction and volumetric water content, indicate that the hydraulic state of in situ loess remained on a scanning curve for the duration of the monitoring period, despite the occurrence of significant wetting events. This, in combination with triaxial test results, allows the contribution of suction to unsaturated shear strength to be quantified. Temporal variations in suction's contribution to strength confirms seasonal variability in unsaturated shear strength and thus slope stability.