• A numerical heat transfer model involving seepage is developed. • The effects of different engineering measures to avoid the permafrost degradation are compared and analyzed. • The optimal combined seepage-proof measure is proposed. Permafrost degradation causes many engineering problems and triggers disasters around the cold regions. Here, we monitored the ground temperature around a water retaining wall that located in permafrost regions, Northeast of China. Then, a numerical model involving seepage is developed to evaluate the thermal condition of the project and the effect of different protective measures is compared. The findings of our study are as follows: at the initial stage after the water retaining wall is constructed, the temperature under the wall is mainly affected by the hydration heat of concrete and the initial temperature of the backfill soil. For the operation of water retaining wall in long terms, the seepage is a vital factor for the permafrost degradation around the foundation. Besides, as the insulation board restrains the heat transfer between the soil and the air because of its low thermal conductivity, the accumulated heat accelerates the permafrost degradation. Therefore, the insulation board is not suitable for applying to the foundation of hydraulic engineering in permafrost regions. However, the seepage-proof has an obvious effect on preventing the permafrost degradation. In particular, the temperature under the water retaining wall is always below 0 °C when the seepage-proof is constructed in the combined vertical and horizontal direction. This paper can help us to understand the thermal conditions of the hydraulic engineering in permafrost regions and provide some valuable references for these engineering about how to prevent permafrost degradation and maintain thermal stability.