Based on the results of a large number of laboratory compression-direct shear combined tests, the shear strength properties and mechanisms of typical peaty soil with a high degree of decomposition, sampled from three different sites in Kunming and Dali cities, were analyzed. The test results demonstrate the following: the shear stress-shear displacement curves of peaty soil showed different shapes in the consolidated quick shear test, quick shear test, and slow shear test; with the increase of the normal stress, the shear deformation changed from plastic deformation to elastic-plastic deformation in the consolidated quick shear and slow shear tests; the shear deformation in the quick shear test showed mainly the plastic deformation under different normal stresses; the shear strength envelopes of peaty soil with a high degree of decompression were, basically, two intersecting polygonal lines with different slopes; the normal stress(σ_s)corresponding to the break point of shear strength envelopes was about 200 kPa in the consolidated quick shear test and slow shear test, and the value was about 100 kPa in the quick shear test. Based on analysis of the compression deformation of peaty soil, the evolution mechanisms of the shear strength were further analyzed by means of establishing compression-shear microstructural models for peaty soil. We conclude that the increasing normal stress causes peaty soil to change from a porous state to a relatively densified state, leading to changes in the shear strength and the shear strength parameters.