The effect of pile installation is a critical issue in the analysis and design of pile foundations but it is commonly ignored due to various numerical difficulties. In this paper, the installation process of an open-ended pipe pile into a sand deposit is simulated by using the zipper technique combined with the Arbitrary Lagrangian-Eulerian (ALE) method in the framework of three-dimensional (3D) finite element modeling. The subsequent lateral load response of the pile is also simulated and compared with that without consideration of the pile installation. The state dependent behavior of sand in associated with the pile installation and the subsequent lateral load is described using an advanced constitutive model. The study shows that for a relatively loose sand deposit, the sand surrounding the pile exhibits contraction and the disturbance zone takes the form of a trapezoid, whereas for a dense sand deposit, the sand near the pile will dilate and the disturbance zone takes the form of an inversed trapezoid. Furthermore, the deformation mode of the surrounding sand under the lateral load differs to some extent from that without consideration of the installation effect. Particularly, the location of the rotation point for the laterally loaded pile tends to move downwards when the pile installation process is considered.