Water-retention dykes at Seven Sisters Generating Station in Manitoba have experienced irregular instabilities since they were heightened in the late 1940s. An investigation was undertaken to compare three locations at the site, one section of dyke that had experienced previous instability, a second section that had remained stable, and a third, background location that had not experienced dyke loading. The investigation included laboratory tests, field tests, and computer modelling. The laboratory tests indicated anisotropic stiffness and brittle strain-softening behaviour in the highly plastic clay beneath the dykes. Results from the stable and unstable sections showed greater brittleness and anisotropy at the unstable section. Pore fluid chemistry tests for cation and anion concentrations showed considerable reductions in concentrations of calcium and sulphate beneath the dykes compared with those of the background section. This suggested leaching of gypsum in the foundation soil. Computer modelling was done using seepage, stress-deformation, and slope stability software. Results indicated that the stable and unstable sections both had safety factors greater than unity if "post-peak" strengths were used. Both were close to unity if residual strengths were used. The results suggest that time- and location-dependent depletion of gypsum cementation bonds caused by seepage beneath the dykes has increased the brittleness and anisotropy and reduced stability with time.