The soil-water retention and soil shrinkage characteristics are both crucial constitutive relations for unsaturated soils. Although existing research has explored the correlation between these two characteristics to some extent, the underlying mechanisms remain inadequately investigated. To investigate the correlation between the soil-water retention and soil shrinkage behavior, a series of soil-water retention and soil shrinkage tests is performed on compacted clays over a wide suction range (0-367 MPa). The test results show that the pore water in compacted clays is first expelled from large pores in low suction range. The drainage of pore water at low suctions is predominantly responsible for the phase of structural shrinkage in the soil shrinkage curve. The consistency between the characteristic transitional water contents in the soil shrinkage curve (SSC) and the inflection points in the soil-water retention curve (SWRC) is identified for all the compacted clays. The bimodal pore-size distributions (PSDs) of different clayey soils are obtained using the mercury intrusion porosimetry. The bimodal pore-size distribution characterization is the intrinsic factor in shaping the bimodal morphology in the SWRC over a wide suction range. The low proportion of micropores in clays is responsible to the indistinct zero-shrinkage stage of the SSC. The microstructure measured by the scanning electron microscope indicates the manifestation of aggregation effects during desaturation process. The results demonstrate that soil shrinkage is primarily caused by the contraction of inter-aggregate pores, rather than the evolution of intra-aggregate pores. The findings can greatly enhance the understanding of the soil-water retention and mechanical behavior of compacted clays in varying water content conditions.