It has been widely demonstrated that haptic interaction can enrich the sense of copresence of distributed users and improve their performance in collaborative virtual environments (CVEs). However, the influence of network traffic on haptic collaboration, particularly packet loss in haptic data streams, is still largely unknown. In order to investigate this effect, we designed and conducted a series of experiments on a simulated lossy network. First, a single-user interactive task was designed to estimate the just- noticeable packet loss threshold in terms of the length of burst loss (LBL). Second, a CVE was developed in which two users are required to work together on a goal-directed task through haptic collaboration. Experiments were performed to evaluate the users' task performance at different packet loss rates and their perception using subjective measurements. Finally, the effect of packet loss combined with network latency was investigated. The findings are: (1) the threshold LBL value for haptic discontinuity to become noticeable is 60.18 ms; (2) haptic collaboration performance is sensitive to packet loss rate; and (3) while the combined effect of packet loss and communication delay adversely affects collaborative haptic interactions, the influence due to packet loss rate is dominant when the delay is below a certain threshold. These results can serve as a guiding reference for the design and development of virtual telepresence systems with rich haptic collaborations.