In order to protect surface buildings and maximize the recovery of coal resources, there are a large number of strip coal pillars and unfilled goafs left in strip mining areas in China. Affected by the comprehensive factors such as long-term overlying rock load, water accumulation in goafs, and adjacent mining, the instability probability of strip coal pillar increases greatly, which becomes a potential hidden danger of surface disaster. However, the law of overlying rock and surface movement caused by strip coal pillar instability is not clear up to now. Therefore, a series of experimental studies on the law of overlying rock movement and deformation induced by strip coal pillar instability are carried out in this paper. The results show that it is feasible to use paraffin-containing materials to make a strip coal pillar model and simulate strip coal pillar instability by heating paraffin. After mining, the subsidence curve of the L5 monitoring line and its upper strata is “disk.” After the instability of the strip coal pillar, the subsidence curve changes from “disk” to “basin.” The instability of strip coal pillar can lead to significant and more harmful overburden movement between overburden and surface than that of strip working face. However, because the unstable coal pillar still has a certain bearing capacity, the maximum subsidence of the surface is still far less than that under the condition of longwall mining.