The lateral deflection of a cylindrical diaphragm wall and the associated ground movement induced by a deep excavation are analyzed by performing site instrumentations and numerical analyses in a coastal area of Korea. Wall lateral deflection, rebar stress and pore water pressure are measured and analysed in 8 directions. Variations of soil properties with the decrease of confining pressure are compared by performing various in-situ tests before and after the excavation. To calculate the wall's lateral deflection accurately, the effects of small-strain nonlinearity and confining pressure reduction developed during the excavation are considered in the proposed numerical analysis. By comparing the numerical and measured results, the importance of considering small-strain nonlinearity and confining pressure reduction in the nonlinear FEM are emphasized. Also, parametric studies on the performance of cylindrical diaphragm walls are carried out for similar future excavations in coastal areas.