Water-induced strength deterioration of rock mass is a crucial factor for rock slope instability. To better show the degradation process of rock slope water–rock interaction, we used bentonite as a water-sensitive regulator to build a new rock-like material that matches the features of water-induced strength degradation based on the cement-gypsum bonded materials. Twenty-five schemes of the material mixture proportion were designed using the orthogonal design method considering four factors with five variable levels, and a variety of experiments were conducted to obtain physico-mechanical parameters. In addition, one group of rock-like material proportion was selected and applied to the large-scale physical model test. The experiment results reveal that: (1) The failure mode of this rock-like material is highly similar to that of natural rock masses, and the physico-mechanical parameters vary over a wide range; (2) The bentonite content has a significant influence on the density, elastic modulus, and tensile strength of rock-like materials; (3) It is feasible to obtain the regression equation based on the linear regression analysis to determine the proportion of rock-like material; (4) Through application, the new rock-like material can effectively simulate or reveal the startup mechanism and instability characteristics of rock slopes under water-induced degradation. These studies can serve as a guide for the fabrication of rock-like material in the other model tests.