To investigate the passive earth pressure of finite soil behind retaining walls, this study considered the principal stress deflection caused by the arching effect of soils. To this end, the shape of the principal stress trajectory was simplified to a straight line, and the finite soil behind retaining walls was divided into several thin-layer elements along the simplified straight line. Subsequently, the calculation formulas for the passive earth pressure distribution, resultant force, and height of its action point were obtained based on the limit equilibrium condition of the thin-layer elements. In addition, the correctness and rationality of the proposed method were verified by comparing its values to those of previously reported experiments and theories. The parameter analysis revealed that the resultant force of passive earth pressure decreased significantly at the initial stage with an increase in the aspect ratio of the finite soil and then remained constant, whereas the height of the action point of resultant force increased gradually and then remains unchanged.