The collapsibility of the loess-paleosol sequence (LPS) is a crucial property with implications for engineering applications and the understanding of paleoclimate. In this investigation, double oedometer testing and SEM were employed to comprehensive characterizations of the collapsibility and microstructure of the Luochuan profile in Shaanxi Province, China. The results of the tests revealed that the collapse potential of the LPS exhibits a decreasing trend as burial depth increases, and the collapse potential of the loess layer was found to be higher than that of the adjacent paleosol layer. However, it is noteworthy that the initial collapse pressure and structural yield stress demonstrate an opposite pattern to the collapse potential. Correspondingly, the microstructure of the LPS undergoes significant alterations with varying burial depths. These changes involve the transition from an overhead structure to a matrix structure, a shift in particle contact relationships from direct point contact to indirect surface contact, a modification in the degree of cementation from slight to complete, and a reduction in the volume of all pore types. Based on these test outcomes, collapse potential is proposed as a novel climatic indicator. Greater collapse potential signifies a dry and cold climate, which promotes loess deposition. Conversely, smaller collapse potential corresponds to a warm and humid climate characterized by intense weathering, facilitating paleosol development. This connection between collapse potential and paleoclimate provides a new perspective for understanding the past climatic variations recorded in the LPS.