Setting reasonable coal pillar is a key to ensure safe mining of island coal face heading goaf in deep mine. With determination of reasonable width of coal pillars of non-equal width isolated working face 3201 in worked-out area in one mine in Shandong as the engineering background, a research was conducted on the mechanism of rock burst induced by and the reasonable width of coal pillars of isolated working face in worked-out area and the main conclusions are as follows: (1) the coal pillars of isolated working face 3201 in worked-out area changed from pillars with goaf on two sides→pillars with goaf on three sides→pillars with goaf on four sides, resulting in evolution of overlying strata from pre-mining static “┒-shaped” structure→“C-shaped” structure→“O-shaped” structure and corresponding spatial stress from “saddle-shaped” profile→“platform-shaped” profile→“arch-shaped” profile; (2) the rock burst was induced by coal pillars, because the high stress on coal pillars at critical state of a rock burst was greater than their comprehensive strength and induced a rock burst due to sudden instability; (3) by establishing a bearing and load model of coal pillars at critical state of a rock burst and based on the equilibrium relation, an method for estimating reasonable width of coal pillars of isolated working face in worked-out area in deep mine was derived and applied to the isolated working face 3201 in worked-out area, thus comprehensively determining that the width of coal pillars should be 130m. The field stress monitoring verified the reasonability. The research result is of great significance to prevention of rock burst induced by coal pillars of isolated working face in worked-out area in deep mine.