Abstract: Expanded polystyrene geofoam (EPS) blocks, placed between a retaining wall and the backfill soil, can effectively reduce the earth pressure acting on the wall due to their compressibility. However, this also leads to a distribution and magnitude of earth pressure behind such retaining walls (hereafter referred to as “EPS block-reduced-pressure retaining walls”) that differ significantly from those of rigid retaining walls. In this study, model tests were conducted to investigate the displacement pattern of the sand backfill and the distribution of earth pressure behind retaining walls with EPS blocks. Based on these observations, a calculation method for earth pressure considering the arching effect was proposed. Furthermore, the influence of EPS block density and thickness on earth pressure was analyzed. The results indicate that under a surcharge load, an approximately triangular sliding wedge forms in the backfill behind the wall, with the sliding surface extending into the middle of the EPS block. The earth pressure distribution on the EPS block-reduced-pressure retaining wall is nonlinear; as the surcharge load increases, the earth pressure varies from increasing to decreasing with wall depth. The greater the thickness and the lower the density of the EPS block, the smaller the earth pressure behind the wall. When the earth pressure is reduced to the level of active earth pressure, further increases in EPS thickness or reductions in density have no additional effect. These findings provide theoretical support for the optimized design of geofoam inclusions in reduced-pressure retaining wall structures.