Knowledge of shrinkage mechanism and the accompanied cracking behavior is helpful for better understanding the hydraulic and mechanical performance of clay soil under atmosphere condition. Initially saturated thin clay layers were prepared and subjected to air drying in this investigation. Water evaporation, volume shrinkage, surface crack initiation and propagation processes were monitored during the whole drying period. With application of image processing technique, the geometric or morphological characteristics of crack patterns were quantitatively described. Results show that the water in the clay layer evaporated at a near constant rate and then it began to decline when the water content was close to the air entry value. The clay layer volume shrinkage was contributed completely by vertical subsidence before desiccation crack initiation, and the measured final vertical shrinkage strain was several times higher than the lateral shrinkage strain. In addition, it was found that most of the cracks and volume shrinkage occurred during the constant rate of evaporation period while the specimen was still saturated. Crack initiation and propagation generally took place in three stages and terminated at the shrinkage limit. During the process of crack propagation, the crack intersections reached a stable value first and were followed by crack length and crack width.