To track the development of cracks in clay dam slope in extreme drought, we conducted model test to simulate the heavy rainfall and extreme drought condition at Baiguishan reservoir in 2014 as a case study. We obtained the changes in matric suction of slope soil during wetting and drying cycles, and analyzed the stability of dam slope according to the obtained soil-water characteristic curves (SWCCs). We conclude that the loss of water in dam surface caused by short-term drought does not affect the stability of dam slope; but cracks generated by long-term drought would become fast channels of rainfall infiltration in heavy rainfall, which drastically reduces the strength of slope soil and severely affects dam stability. Slope soil is loosened by continuous dry-wet cycles, and cracks are easily generated even not in extreme drought, both posing potential risk to the dam. Since crack development is closely related to the change of water content and has a direct impact on slope soil strength, we recommend to determine the slope stability and to propose corresponding protective measures according to SWCCs in different periods.