The red-bed rocks were chosen and studied by using uniaxial compressive experiment and scanning electron microscopy to investigate the effect of drying-wetting (D-W) cycles on the mechanical properties and microstructural characteristics of red-bed rock. Additionally, the energy mechanism of specimens subjected to drying-wetting cycles was also explained. Experimental results showed that, the stress-strain could be divided into four characteristic stages in the compression failure process. After subjecting to cycles of D-W, the stress-strain curve gradually changed from softening to hardening. At the same time, uniaxial compression strength (UCS) and elastic modulus dropped obviously, while Poisson’s ratio gradually raised. Microstructural analysis results indicated that the microstructure of the specimen surface was no longer dense and uniform, and the porosity of tested specimens significantly increased with D-W cycles increasing. As the porosity grew, UCS and elastic modulus gradually declined. According to the first law of thermodynamics, the process of rock failure was an event of energy transfer and conversion. As the number of D-W cycles increased, the energy density of specimens all present linear fell. From the perspective of the theory of energy dissipation, the dissipated energy was essential for rock failure, and closely related to the strength of the specimen. With D-W cycles increasing, the specimens were more prone to failure, and the dissipated energy required for failure decreased gradually.