The occurrence of slope instability disasters seriously endangers the safety of people’s lives and property in China. Therefore, it is essential to study the slope instability process and the interaction between soil and retaining walls. In this paper, the smoothed-particle hydrodynamics (SPH) method, based on the elastoplastic constitutive model of rock and soil, was used to simulate the entire process of slope instability and the interaction between soil and retaining walls. The model, based on the classical elastic–plastic theory, includes linear elastic deformation and plastic deformation following the non-associated flow rule under the Drucker–Prager (DP) yield criterion. By considering the plastic characteristics of geotechnical materials, this method can accurately simulate the slope movement process. The model was established, calculated, and compared with a slope example, thus verifying its feasibility. Furthermore, the motion response of the retaining wall under different conditions was studied, which provides a new numerical simulation platform for the stability checking of the retaining wall and motion analysis after the interaction between the retaining wall and slope soil.