Many caisson walls are subjected to the sudden drawdown of water level in front of the structures due to tide, flood, and reservoir discharge, and the stability of caisson walls under such conditions has been an important issue in hydraulic and harbor engineering. However, present understanding on the relationship between stability and water level drawdown is still not clear, which causes some hidden safety issues in the design of such structures. In this study, this problem is investigated through model testing, numerical simulation and theoretical analysis. Two large-scale wall models were tested, based on which a numerical procedure was validated. The numerical procedure was then employed to analyze the pore water pressure in the backfill. The dynamic pore water pressure was finally used to analyze the stability of caisson walls on highly permeable foundations. It was found that the stability of the structure decreased and then increased with the drawdown of water level in the presence of varying discharging rate and backfill permeability, and the smallest factor of safety was found when the front water level was at 3/5-3/4 of the wall height. The minimum factors of safety against overturning and sliding in designed condition of rapid water level drawdown are larger than those under other conditions. Stability was largely under the combined effect of dynamic water pressure, earth pressure and the effective weight of the retaining wall, and the most unstable moment did not match the moment with the largest water level difference.