Abstract: A kind of new composite soil-nailed retaining wall, composed of soil, soil nail and soil-mixed cement, has been suggested and widely used in Shanghai recent years. It is a new kind of support form of foundation pit and successfully applied in the loose or saturated soft soil. This paper studies the action mechanism of the technique. The FEM is employed and a kind of rotational Goodman interface element is proposed to simulate the behavior of interface between the soil-mixed cement, which forms the barrier of seepage flow along the boundary of foundation pit, and soil ground. The calculated values of displacements are compared with the data measured in situ. The results show that they match with each other very well, and that this kind of analytical method is rational and applicable for case study.