To investigate the impact of underground water seepage and soil stress fields on the deformation of excavation and support structures, this study initially identified the key influencing factors on excavation deformation. Subsequently, through a finite element simulation analysis using Plaxis, this study explored the effects of critical factors, such as the excavation support form, groundwater lowering depth, permeability coefficient, excavation layer, and sequence on excavation deformation. Furthermore, a comprehensive consideration of various adverse factors was integrated to establish excavation support early warning thresholds, and optimal dewatering strategies. Finally, this study validated the simulation analysis through an on-site in situ testing with wireless sensors in the context of a physical construction site. The research results indicate that the internal support system within the excavation piles exhibited better stability compared to the external anchor support system, resulting in a 34.5% reduction in the overall deformation. Within the internal support system, the factors influencing the excavation deformation were ranked in the following order: water level (35.5%) > permeability coefficient (17.62%) > excavation layer (11.4%). High water levels, high permeability coefficients, and multi-layered soils were identified as the most unfavorable factors for excavation deformation. The maximum deformation under the coupled effect of these factors was established as the excavation support early warning threshold, and the optimal dewatering strategy involved lowering the water level at the excavation to 0.5 m below the excavation face. The on-site in situ monitoring data obtained through wireless sensors exhibited low discrepancies compared to the finite element simulation data, indicating the high precision of the finite element model for considering the fluid–structure interaction.