Granular backfill is generally confined in stopes to bear underground pressure in metal mines. Its mechanical behavior under lateral confinement is vital for controlling stope wall behavior and estimating surface subsidence in backfill mining operations. In this paper, an experimental apparatus has been developed to explore the bearing process of granular material. Pebbles were selected to model granular backfill. A series of compression experiments of pebble aggregation were performed under lateral confinement condition using the experimental apparatus. The bearing characteristics of the pebble aggregation with seven gradations were analyzed. Based on the experimental data, a constitutive model that takes the real physical characteristics of granular material into account was proposed with variable deformation modulus. The constitutive model was implemented into the FLAC3D software and verified basically by comparison with experimental results. The surface subsidence in backfilling mines was studied using the proposed model. The effects of the particle size of the granular backfill and the height and buried depth of mined-out stopes on surface subsidence have been clarified. The research results are of great significance for guiding backfill mining and evaluating surface subsidence and movement.