To address the scarcity of data on compacted snow shear damage under complex conditions, unconfined shear tests were conducted in Northeast China. This study examined apparent shear strength variations with density (300–550 kg·m−3), temperature (−17.4°C to 0°C) and strain rate (1.3 × 10−5–3.8 × 10−2 s−1), complemented by discrete element method simulations of particle rearrangement and crack extension. The key findings include the following. (1) The apparent shear strength first increases but then decreases with increasing strain rate, increasing by 56% during ductile failure and decreasing by 97% during brittle failure. The form of damage transitions from ductile to brittle as deformation and crack expansion occur, with a critical strain rate of ∼10−4 s−1. (2) An increase in compacted snow density significantly enhances shear capacity and inhibits crack propagation; a density increase of 200 kg·m−3 can reduce transverse and longitudinal snow cracks by 10–20%. (3) Snow temperature influences bond strength, thereby affecting both the strength value and the size of deformation cracks. Snow temperature exhibits a negative correlation with apparent shear strength. This study is significant for understanding alpine snow layer shear damage mechanisms and useful for compacted snow pavement design.