<p>Localized unloading is a common feature in underground engineering and governs ground response through the soil arching effect. While soil arching has been widely studied in granular materials, its deformation-dependent behavior in clayey soils under overburden pressure remains insufficiently understood. This study presents a systematic experimental investigation of soil arching in compacted clay subjected to localized unloading under different overburden pressures and water contents. Vertical stresses in the unloading zone and adjacent stationary regions were monitored, and full-field displacement and shear strain fields were captured using digital image correlation. The results show that soil arching in compacted clay develops progressively with deformation. Higher overburden pressure enhances the extent of deformation and increases the shear band height, thereby promoting load transfer, whereas increased water content leads to more diffuse deformation, delayed stabilization, and reduced final stress concentration. Clear spatial differentiation of stress response is observed, with non-monotonic stress concentration near the trapdoor edge and rapid stabilization farther away. Deformation analyses reveal that soil arching is associated with the upward expansion of localized displacement zones and the development of predominantly vertical shear bands. A quantitative relationship between shear band height and trapdoor displacement is proposed to characterize the deformation-dependent evolution of soil arching. The findings provide experimental insight into ground response under localized unloading in soft clayey ground.</p>