Considering that excavation work in urban areas is often conducted close to the existing infrastructure, evaluating the impact of excavation on the surrounding area is crucial. Although step finite element method (FEM) analyses have been conducted to elucidate the behavior of the retaining wall and surrounding soil during excavation, evaluating the horizontal displacement of the retaining wall and the vertical displacement of the ground behind the retaining wall using linear elastic FEM analysis remains difficult. In this study, the behavior of the retaining wall and adjacent underground structure was evaluated by applying a three-dimensional elastoplastic step finite element method (FEM) analysis, in which the elastic modulus, considering the ground confining pressure and strain due to excavation, and the usefulness of setting the deformation coefficient were evaluated. The results indicated that the displacement behavior could be simulated using elastoplastic analysis, which sets the elastic modulus by considering the excavation effect for each region.