Abstract: The reinforcing and restraining effect of piles embedded in soils is objective. However, this effect is not or has not been effectively considered in the present theory. The relevant research work needs to be continued. Based on the shear displacement method, the reinforcing and restraining effect is taken into account in the calculation of the pile group settlements in this paper. The reduction effect caused by the existence of the other adjacent piles and the equivalent stiffness coefficients of soil around each pile are developed. Then on the basis of the shear deformation transfer method, vertical displacement equation caused by load acting on top of the analyzing pile is built. So recurrence relations of settlement and axial force between pile head and pile tip are respectively deduced. Thus a flexibility coefficient of the displacement at the pile top induced by its load is obtained. Meanwhile, the flexibility coefficients for the piles due to the loads of adjacent piles are also gained. Lastly, a flexibility coefficient matrix equation is built to calculate settlement of pile groups with high or low pile caps. On the process of the deducing, the multilayer of soils and the interaction of settlements between piles bases are taken into consideration. A new relationship between pile-end resistance and pile-end settlement is proposed using Mindlin displacement solution. Comparisons of the settlement calculation for two pile cases are given to demonstrate the effectiveness and accuracy of the proposed method. The calculating interaction coefficients are much less than the elastic theory methods.