Based on the theory of thermodynamic with internal variables, a soil water characteristic curve model is developed, which can comprehensively consider the effect of capillary hysteresis and volume deformation of unsaturated soil. Based on the second law of thermodynamics, it is shown that both capillary hysteresis and plastic deformation represent some kind of dissipative behavior in nature. The suction is not only related to the changes of fluid phases, but also controlled by the deformation of solid phase. There is mutual coupling effect due to the interaction between the soil-water characteristics and the solid phase deformation. The mechanism of hysteresis phenomenon and the effect of deformation on the suction force are expounded from a microscopic standpoint and a general model of soil-water characteristic curve is established. Then a boundary surface plasticity model is developed, from which a simplified model is developed to describe the influence of the capillary hysteresis and plastic void ratio change. The model is validated using the experimental data. The results show that the new model can address the effect of soil deformation, and accurately describe the capillary hysteresis phenomenon.