The multi-compartment concrete bucket foundation breakwater was first implemented in the Xuwei Port Area of Lianyungang Port, necessitating an exploration of its working mechanism and stability calculation methods. By employing implicit dynamic analysis theory, a three-dimensional elastoplastic numerical model of the bucket foundation breakwater has been established. The model’s validity and reliability have been verified through comparison with monitoring data. This study examines the instability modes of the structure and the failure modes of the foundation under cyclic wave loads, as well as the influence of various parameters on the dynamic stability of the bucket foundation breakwater, including the height of the lower bucket, thickness of the silt layer, effective internal friction angle of the soil, buoyant weight, design wave force, and the action point of the resultant design wave force. This research provides significant insights for the application and promotion of this innovative structure.