The Maoxian Tunnel in Sichuan, China has experienced significant deformation and supporting failure in the surrounding phyllite rock. To address this problem, on-site engineering geological investigation and testing methods were deployed in the present study to examine the characteristics and mechanism of deformation in the tunnel. Scanning electron microscopy, rock hydraulic tests, and uniaxial compressive tests were used to investigate the hydraulic and mechanical properties of the surrounding rock, and to examine the mechanisms underlying the significant deformation. The results suggest that the large deformation in Maoxian Tunnel is a result of shear expansion and progressive failure of the soft rock under high stress. To enhance the integrity and self-sustaining ability of the rock mass, it is necessary to promptly construct support structures and reinforce the surrounding rock.