Based on the shear displacement method used in the negative skin friction calculation of pile, this paper analyzed the constraint mechanism of lateral friction located in soil-waterproof curtain interface towards soil settlement as well as its horizontal transfer law in soil during engineering dewatering. Then, the constraint displacement was deduced. Finally, a novel calculation method for soil subsidence estimation induced by dewatering consideration the effect of lateral friction was put forward. The research results show that the constraint function of lateral friction to soil settlement is mainly limited in the range of 18 m away from the waterproof curtain; the position where the constraint effect of lateral friction became most significant was at the interface of soil and waterproof curtain. The novel estimation method proposed taking the lateral friction into account can well predict the space distribution of soil subsidence induced by dewatering.