AbstractThis paper proposes a two‐dimensional finite element model for the analysis of shield tunnels by taking into account the construction process which is divided into four stages. The soil is assumed to behave as an elasto‐plastic medium whereas the shield is simulated by beam–joint discontinuous model in which curved beam elements and joint elements are used to model the segments and joints, respectively. As grout is usually injected to fill the gap between the lining and the soil, the property parameters of the grout are chosen in such a way that they can reflect the state of the grout at each stage. Furthermore, the contact condition between the soil and lining will change with the construction stage, and therefore, different stress‐releasing coefficients are used to account for the changes. To assess the accuracy that can be attained by the method in solving practical problems, the shield tunnelling in the No. 7 Subway Line Project in Osaka, Japan, is used as a case history for our study. The numerical results are compared with those measured in the field. The results presented in the paper show that the proposed numerical procedure can be used to effectively estimate the deformation, stresses and moments experienced by the surrounding soils and the concrete lining segments. The analysis and method presented in this paper can be considered to be useful for other subway construction projects involving shield tunnelling in soft soils. Copyright © 2004 John Wiley & Sons, Ltd.