In order to acquire the characteristics of ground settlement under the high energy dynamic compaction, the geometric nonlinear finite element method and the cap model in LS-DYNA finite element program are used to analyze the deformation mechanism of dynamic compaction. Firstly, according to the actual situation of site construction to establish the finite element model as basic computing model to model the process of dynamic compaction, and comparing with the actual monitoring data, the results indicate that the calculated results acquired in the analysis are close to the actual data measured in dynamic compaction; and the basic model used to calculate the settlement of surface ground is appropriate. Furthermore, the different energy level, different momentum, and some friction parameters effect on the settlement of surface ground are analyzed based on the basic model. Lastly, some useful conclusions are drawn. The results show that the horizontal force between hammer and the foundation soil is not to be ignored under the high energy dynamic compaction.