The prominent tectonic activity occurring in the southern margin of the Chinese Loess Plateau (SCLP) has resulted in the widespread development of loess-mudstone landslides (LMLs) along the fault zone. To elucidate the failure mode of LMLs under the action of a geological environment shaped by fault activity, a series of physical model tests was conducted considering various slope structures (contact angles), topographic features (slope gradients), lithology composition (loess layer thicknesses), erosion morphologies, and rainfall intensities. Multi-sensor monitoring and topographic data extraction revealed that geological environmental factors, such as specific slope structure, topography, and lithology shaped by fault activity, exert significant control over the stability and failure mechanisms of LMLs. Rainfall was identified as the primary trigger of LMLs. Furthermore, the dynamic responses, deformation behavior, and failure characteristics of slope volumetric water content, pore pressure, and soil pressure under various geological factors were quantitatively analyzed, and the regulatory role of these factors in the evolution of slope micro-topography was clarified. Finally, by integrating field investigation results and analysis of regional geological evolution processes, the formation mechanisms of LMLs within the SCLP fault zone were elucidated, and a systematic framework for the evolution of failure modes under fault activity was proposed.