Underground caving can potentially lead to large-scale surface destruction. To test the safety conditions of the surface construction projects near the circular surface subsidence zone in the Hemushan Iron Mine, this paper proposes an analytical model to analyze the stability of the cylindrical caved space by employing the long-term strength of the surrounding rock mass, the in situ stress, and the impact of caved materials as inputs. The proposed model is valid for predicting the orientation and depth where rock failure occurs and for calculating the maximum depth of the undercut, above which the surrounding rock mass of the caved space can remain stable for a long duration of time. The prediction for the Hemushan Iron Mine from the proposed model reveals that the construction projects can maintain safe working conditions, and such prediction is also demonstrated by the records from Google Earth satellite images. This means that the proposed model is valid for conducting such analysis. Additionally, to prevent rock failure above the free surface of caved materials, backfilling the subsidence zone with waste rocks is suggested, and such a measure is implemented in the Hemushan Iron Mine. The monitoring results show that this measure contributes to protecting the surrounding wall of the caved space from large-scale slip failure. The contribution of this work not only provides a robust analytical model for predicting the stability of rock around a cylindrical caved space but also introduces employable measures for mitigating the subsequent extension of surface subsidence after vertical caving.