Highway waterfall ice hazards usually happen in cold regions. However, minimal research has addressed this so far due to its multidisciplinary nature. In this study, ground water monitoring tests were conducted for 2.5 years to study the relationship between ground water level changes and waterfall ice hazards. To explore the internal factors that lead to highway waterfall ice, gradation tests, penetration tests, and freezing tests were conducted which revealed that coarse-grained particles can enhance the permeability of aquifers. Further, volume expansion of free water freezing in a closed system is the main reason for pore pressure increasing aquifers in research areas. Furthermore, to understand the formation mechanism of highway waterfall ice further, a mathematical model of saturated coarse-grained soil at the state of phase transition equilibrium was obtained. This indicates that the essence of the aquifers’ freezing (coarse-grained soil) in the waterfall ice area is the freezing of closed water. Finally, based on the abovementioned findings, the formation process of waterfall ice is defined as three stages: The drainage obstruction stage, the soil deformation stage, and the groundwater gushing stage, respectively. This definition can provide significant guidance on further research that focuses on prevention of highway waterfall hazards.