<p>Large-diameter shield tunnels crossing water-rich fault fracture zone (FFZ) are highly vulnerable to progressive failure due to the coupled effects of cutterhead disturbance, excavation unloading, and high-water pressure. To clarify the underlying failure mechanisms, a large-scale fluid–solid coupling physical model was developed based on the prototype of the Shantou Bay Tunnel (SBT). Suitable analogous materials were employed to simulate the surrounding rock. A series of model tests were conducted with three different fault widths (0.8D, 1.2D, and 1.6D, D is the diameter of the tunnel) to analyze variations in stress, seepage pressure, and surface settlement. The results indicate that fault exposure induced by shield excavation promotes the formation of a neo-pressure arch within the fault fracture zone. Under the influence of sustained seepage, the neo-pressure arch undergoes a continuous evolutionary process involving formation, temporary stabilization, progressive destabilization, and upward migration toward the ground surface. During this process, seepage pressure and stress exhibit distinct stage-dependent variations, and seepage-induced erosion accelerates the failure of the new pressure arch and ultimately triggering water and mud inrush disasters. At the critical instability stage, the maximum instantaneous increases in vault stress and seepage pressure reach approximately 101%, 123%, and 179%, corresponding to the fault widths of 0.8D, 1.2D, and 1.6D, respectively. Furthermore, particle migration and grain size redistribution within the fault fracture zone under seepage erosion are identified as key factors influencing the stability of the neo-pressure arch and the development of seepage channels. With increasing the fault fracture zone width, the disturbance range expands markedly from 1.07D to 1.53D, indicating that the failure mechanism is strongly dependent on the zone width.</p>