In this study, a modified maximum tangential stress criterion by considering T-stress and uniaxial compression tests have been utilized to theoretically and experimentally reveal the fracture initiation mechanism of a center-symmetric closed crack in compacted clay. The results show that wing cracks occur in the linear elastic phase of the stress-strain curve. In the plastic phase of the stress-strain curve, the wing cracks extend gradually and the shear cracks occur. The crack initiation stress and peak stress of compacted clay first decrease with the rise in pre-crack inclination angle (β = 0°–40°), and then increase with the rise in pre-crack inclination angle (β = 50°–90°). When the pre-crack inclination angle is relatively small or large (β ≤ 10° or β ≥ 70°), the crack type is mainly tension cracks. Secondary shear cracks occur when the pre-crack inclination angle is 10°–80°. When the dimensionless crack length is larger than 0.35, the crack types include wing-type tension cracks and secondary shear cracks. The experimental results were compared with the theoretical values. It was found that the critical size rc of compacted clay under compression-shear loading was 0.75 mm, smaller than the value calculated by the empirical formula (12 mm). The MTS criterion considering T-stress can be used to predict the compression-shear fracture behavior of compacted clay.