Sandy soil liquefaction is common phenomena in engineering construction. However, in fact, saturated or nearly saturated loess liquefaction is also common phenomenon in loess area. In recent decades, large earthquakes around the world are frequent, loess is widely distributed worldwide, and loess liquefaction is one of the hot issues in loess dynamics. China has the most typical loess landform in the world, and Chinese scholars have done in-depth research on loess liquefaction. In this paper, the phenomena, mechanism, influencing factors, microscopic characteristics, evaluation methods and prevention methods of loess liquefaction in China are reviewed systematically. At the same time, improvement of loess saturation technology and new theory of loess liquefaction proposed by Chinese scholars are also analyzed. The results indicated that damages of foundations, landslides and collapses are the main phenomena of disasters caused by loess liquefaction; shear capacity of soil particles due to friction is close to zero during loess liquefaction; the main influencing factors of loess liquefaction are effective confining pressure, load frequency, cyclic stress ratio, saturation, over consolidation ratio; most of soluble salts have been dissolved, which is one of the main causes of loess liquefaction, and structure of loess particles has also been destroyed; evaluation methods of loess liquefaction mainly include the standard method and the Seed–Idriss simplified discriminant method; pore water pressure and strain conform to “A type curve” in loess liquefaction; pile foundation reinforcement, dynamic consolidation, chemical treatment are the main prevention methods of loess liquefaction.