ABSTRACT Overburden bed separation grouting (OBSG), a green mining method, can prevent coal‐mining subsidence reduction and protect the environment of mining areas. The 3101 working face of a coal mine was adopted as the object to study its overburden structure and subsidence reduction mechanism. A 2D physical similarity simulation test was used to analyze the failure, stress field evolution, and displacement evolution of overlying strata movements under OBSG. Compared with the overlying strata structure in caving mining, the subsidence reduction mechanism of mining under OBSG was revealed. The stress growth was insignificant in stress‐concentrated areas, while the stress reduction was apparent in the stress‐relaxed area. The deformed region of overlying strata expanded slowly with a greater maximum vertical displacement than the caving method. Surface subsidence above the grouting layer was low, while that below was high. In summary, the slurry formed a dense support body under OBSG in the bed‐leaving space. The structure provided upward support and compacted overlying strata, which prevented key strata from fracturing under self‐weight stress and minimized surface subsidence caused by coal mining. The results provide a theoretical foundation for enhancing OBSG in subsidence control during mining.