The borehole shear test (BST) is a direct shear test performed on the walls of a borehole in soil. The test is used to measure the cohesion and friction angle by destructing the soil along the circumference of the hole. The fundamental principle, testing method, and data processing method of the BST are introduced. To evaluate the applicability of this procedure to loess in Xi’an, tests were performed to determine the soil shear strength parameters of loess at several depths by using Iowa borehole shear tester. The results of the BSTs are presented along with the results of laboratory triaxial consolidated-undrained (CU) tests and direct shear tests on samples obtained from each testing depth. The BST results are compared with the results from laboratory shear strength tests. It is shown that there is a good linear correlation between shear strength and normal stress. The BST stress-strain curves of the testing loess show strain-softening behavior. The BSTs yield the cohesion values which are lower than those from the laboratory triaxial consolidated-undrained (CU) tests and direct shear tests, but higher friction angle values than those from the laboratory triaxial consolidated-undrained (CU) tests and direct shear tests. The BST results obtained in homogeneous stratum have little discreteness, and thus a “global failure envelope method” can be applied to the statistics analysis of shear strength parameters.