As China's economic construction and social development, projects of roads , railways and other transport infrastructure are also increasing. The safety and efficiency and the quality of life of the road works in the construction and operation periods is closely related with the foundation. Based on the systematic analysis of various factors affected the subgrade deformation, this article makes the main factors to Subgrade Deformation, and the prediction model GM (1, 1) based on gray system theory has been used to build a model on the embankment settlement of coastal highway. Then to predict with the data of highway subgrade. Comparing the model forecasts with the measured data of practical engineering, it shows that the model could reflect the laws of subgrade deformation which has some practical reference value.