Recent in situ TEM experiments observed that single crystalline gold particles with diameter ranging from 300 to 700 nm suddenly collapse, accompanying numerous dislocations escaping from the free surface during a flat punch pushing toward the particle. This collapse is catastrophic for the microdevices in service. In this work, we numerically and theoretically analyze the collapse mechanisms of this kind of “sensitive material.” First, by carrying out molecular dynamics (MD) simulations and finite element (FEM) analysis, we conclude that the strong strain burst in the collapse is derived from the robust emissions of plentiful pile-up dislocations in a particular area. Then, on the basis of numerical analyses, a theoretical model based on the virtual work principle is developed to predict the load–displacement curve during the indentation and reveal the energy dissipation and transformation before the particle collapse. Furthermore, a micromechanics-based dislocation pile-up model is established to quantitatively interpret the mechanism of particle collapse. Based on these studies, we propose the dislocation avalanche at the microscale depends not only on the peak stress but also on the stress gradients. The research is helpful for the design of reliable microdevices.