Extreme weather has recently caused many disasters worldwide. In August 8, 2009, Southern Taiwan suffered from serious floods during Typhoon Morakot. In this extreme rainfall event, the Chiuliao first levee in the Laonong River basin experienced catastrophic failure. Therefore, this study focuses on the levee failure mechanisms based on variations in levee water levels. Specifically, this study investigates four mechanisms based on limit state equilibrium. The first mechanism involves the slope stability under hydrostatic conditions at various water levels. The results of this analysis show that the levee cannot fail under this mechanism. The second mechanism involves the levee slope stability with steady-state seepage. Because the water levels are different on the protected and flood sides, the water recedes much faster on the flood side than the protected side. Based on this analysis, the levee slope might fail when the water level at the protected side is close to the top of levee and the water level at the flood side starts to recede. The third and fourth mechanisms involve the levee foundation failure in terms of sliding and overturning failure. The results of this study indicate that the levee foundation is more prone to sliding failure than overturning failure. Based on these results, this study shows that the levee failed when the water level at the protected side neared the top of levee while the water level at flood side started to recede. At this moment, the levee may fail because of both the slope failure with seepage and sliding failure of the levee foundation.