Based on the Foshan-Dongguan Intercity Line Changlong Tunnel Project, indoor tests and numerical simulations were conducted to study the instability and progressive failure process of the cutter replacement ground at atmospheric pressure. The fast Lagrangian analysis of continua method was adopted to establish the numerical model. The safety factor of the cutter replacement ground was analyzed, and the effect of the steel pipe pile-grouting method on the control effect of release and displacement was studied. The results show that the excavation face becomes unstable at atmospheric pressure, which causes soil loss and earth pressure release. As the cutter head moves backward, a large-scale vertical displacement of cutter replacement ground is gradually induced, and finally goes through to the surface. With the steel pipe pile-grouting reinforcement, the safety factor of the cutter replacement ground is significantly improved, and the ground stress release and displacement is effectively controlled. Compared with the grouting reinforcement, the steel pipe pile-grouting reinforcement has the advantages of short construction period and less pollution. Moreover, the steel pipe pile could be recycled without affecting the subsequent use of the soil, which provides a new ground reinforcement idea for the project.