Groundwater withdrawal during excavation in complex multi-aquifer-aquitard system greatly affects the hydrogeological environment, causing severe land subsidence. Hence, the study of deformation and stability of excavation, which has hydraulic connection with surrounding environment, is vital for construction safety. In this study, a recorded case history is simulated by numerical model considering coupled hydro-mechanical analysis, which is verified by field measurements. The numerical model is used to study the coupled effects of hydraulic conductivity of aquitard and diaphragm wall depth on the groundwater head of aquifer, ground settlement and basal stability. The results show that a great hydraulic conductivity of aquitard results in hydraulic connections between adjacent confined aquifers, and connections between inside of the excavation and outside of the excavation, which leads to the influencing radius extending to 8 times excavation depth and basal failure. The effect of increasing diaphragm depth is limited. Finally, two control measures are proposed: (a) decreasing the hydraulic conductivity of aquitard, such as ground improvement; and (b) dewatering the groundwater head inside excavation and recharging outside excavation.