Thaw settlement caused by permafrost degradation has great impacts on engineering infrastructure, hydrological cycles and ecosystems in recent decades under climate warming. We combined the moving‐grid method (Lagrangian method) with the heat conduction equation to develop a new moving‐grid permafrost model. Our model takes into account not only the cryostratigraphy of permafrost, but also the thaw settlement. We used the model to simulate the thaw settlement and the permafrost changes at the three sites along the Qinghai‐Tibet Engineering Corridor from 1966 to 2018. The monitoring of the ground temperature and the geodetic leveling in situ were used for model validation. The results show that our model can accurately reproduce the observed interannual thaw settlement and ground temperature fields. The risk of thawing settlement in ice‐rich permafrost regions in the zero‐temperature‐gradient stage is high.