This paper addresses the important role of water in geohazard and failure in urban underground excavation. These so-called underground water-related hazards, such as leakage of the tunnel eye due to launching and docking of the shield, failure of the cross-passage excavation, and failure of the retaining wall caused by water ingress for deep excavation, often lead to catastrophic disasters. Leakage of the tunnel eye during shield launching that results in failure was selected for further analysis using finite element simulations. According to this work, the flush-in of water mainly leads to the failure of soils located at the invert of the tunnel immediately behind the wall, and gravity is the cause of such failure phenomena; these findings agree with field observations. A significant reduction in the pore pressure of soils behind the wall associated with water relief through the tunnel eye and the quantity of water flow into the excavation is predicted. Piping failure is also suggested to occur during shield launching under the current arrangements. Finally, according to parametric studies, reducing the soil permeability and increasing the cohesion force are recommended to prevent the opportunity for failure.