Abstract: We use a home-developed loading and measuring system to study failure processes of clay specimens with holes under displacement-controlled loading and in plane strain condition. We use gasbags to apply the internal and lateral pressures for the displacement-controlled loading. We further use the digital image correlation method to obtain the strain fields. We arrange the monitored lines to investigate distributions and evolution of the maximum shear strains and principal strain axis rotational angles inside shear bands and outside. We find the following results. With an increase of the vertical strain, clay specimens undergo uniform deformations and subsequent localized deformation, as found from spatiotemporal distributions of the maximum shear strains. For monitored points outside shear bands, the maximum shear strains have an increasing tendency when they are far away from the hole, which is due to unloading, i.e., the decrease of the elastic strain resulting from damages inside shear bands. For monitored points in the vicinity of the hole surface, changes of the maximum shear strains are complex, which is related to competition between the decrease of the elastic part and the increase of the plastic part. For the monitored point at the shear band tip, in comparison with monitored points in its forward and backward directions, the horizontal linear strain rapidly increases, the value of the vertical linear strain rapidly decreases, and the value of the shear strain rapidly increases, leading to a rapid increase of the value(about 30 degrees) of the principal strain axis rotational angle. At the same vertical strain, the vertical stress of the clay specimen with a hole increases as internal and lateral pressures increase.