Compaction piles is one of the conventional methods for foundation treatment in collapsible loess, there are very few research results about soil compaction effect between piles when forming the piles. Firstly, the stress field and displacement field of soil around compaction piles are elastic-plastic analyzed on the basis of the cavity expansion theory; then a series of field and laboratory tests were performed to evaluate the treatment effect of the compaction pile composite foundation. The result shows that the collapsibility has been eliminated, all physical mechanics indexes have been improved, and soil compressibility and modulus of compressibility are also increased remarkably. It embodies the correctness of the computation theory. And the feasibility of the compaction piles composite foundation on collapsible loess area is further proved.