Abstract: A nonlinear stress and strain analysis of tunneling and working condition of No. 7 tunnel of Wanjiazhai water transmission project in Shanxi Province is conducted. The initial stress field is simulated by grading landfill,and the theory of unloading proposed by Duncan and boundary stress of elasticity were used to simulate excavation of the tunnel. Goodman joint elements are utilized to simulate the joints of liners. Both loading and unloading tests are conducted for determination of parameters of Duncan-Chang’s model. The loading on the pipes is evaluated according to Terzaghi’s theory on loosening earth pressure. Several working cases are analyzed and some reasonable results are obtained.