Abstract: Taking a rigid retaining wall with granular backfill for example, it is assumed that the failure surface is a plane through the wall heel and the soil arch in the backfill takes the form of a circle, the differential level layer method is modified considering the mean shear stress between level soil layers in the failure wedge, and then a new formulation is proposed for calculating the active earth pressure on the retaining wall undergoing horizontal translation. In order to verify the accuracy of the proposed formulation, the predictions from the equation are compared with both the existing full-scale test results and the values from the existing equations. The calculated results show that the mean shear stress between level soil layers is related to the inclination of wall back face, the angle of wall friction and the internal friction angle of backfill, and its distribution along the wall height is nonlinear like that of active earth pressure. For the wall with a vertical back face or a steep and rough one, the point of application of the resultant active earth pressure by the proposed formulation considering the mean shear stress between level soil layers is higher than that by the Coulomb’s theory, and lower than that by the existing theories which the mean shear stress between level soil layers is negligible. But the conclusion will be just the opposite for the wall with a relatively gentle and smooth back face. In addition, whether the mean shear stress between level soil layers is taken into consideration or not, the height of the resultant active earth pressure will decrease with the increase of the inclination of the back face.