To calculate the horizontal displacement of the diaphragm wall and surface settlement caused by foundation pit excavation, the three-parameter Kerr foundation model was applied to a diaphragm wall and derived the flexural differential equations of the diaphragm wall and calculated the horizontal displacement of the diaphragm wall using the finite difference calculation method. The boundary element method combined with the Mindlin displacement solution was then used to invert the additional horizontal stress near the diaphragm wall. Lastly, the Mindlin solution was used to calculate the surface settlement. The effectiveness of the proposed calculation method was verified by comparing the horizontal displacement of the diaphragm wall and the surface settlement between the theoretical calculation and the actual project. The theory proves that there is a certain connection between the horizontal displacement of the diaphragm wall and the surface settlement, and the horizontal displacement of the diaphragm wall is larger than the surface settlement. Using this theory to further analyze the foundation pit construction parameters, the greater the thickness and elasticity modulus of the diaphragm wall, and the greater the diameter and number of internal supports, the smaller the horizontal displacement of the diaphragm wall and the surface settlement. The theory can accurately predict the horizontal displacement of the diaphragm wall and surface settlement and provides guidance for the construction of foundation pit projects.