Numerical simulations were carried out to investigate the current situation of underground water and its variations rule resulting from site grading at a proposed iron and steel base in Xichang. The comparison shows that the numerical simulations results of underground water level tally with measured results very well. On the basis of the simulation analysis result of current situation of the underground water, its variations rule after site grading was simulated and forecasted. The results show that after site grading, due to recharge, discharge and runoff conditions of underground water have be changed, the underground water level at the dig, fill section and the edge of the site would also be changed too. Specifically, the underground water level of dig section lowers than that before site grading while fill section’s higher than before.