Abstract: Based on mechanism of pile-soil interaction, an elastic analytic solution to determine the displacement and stress distribution in the soil around laterally loaded piles is derived in this paper. The solution can be used to find out the variation of displacement, stress and strain in the soil under horizontal loads. Then, according to the empirical relation between soil deformation modulus and displacement, the modulus distribution in the soil around the pile shaft and weighted modulus are obtained approximately. By introducing the weighted modulus to the current finite element-finite layer method, the weighted stiffness matrix of foundation is set up with a program worked out as well, which can consider the influence of the non-homogeneity and nonlinear characteristic of the soil around the pile shaft. Finally, combined with an engineering example, the effect of different soil modulus on the internal forces and deformation along pile shaft is discussed. The results show that, it is more reasonable for pile-soil interaction analysis to adopt weighted foundation stiffness in the finite element-finite layer method.