Cyclic wetting of high-speed railway subgrade leads to excessive uneven settlement and intense wheel-rail dynamic response, seriously affecting operation comfort and safety. In this paper, the effect of cyclic wetting on accumulative deformation of lateritic clay was investigated by dynamic triaxial test. Incorporating the cyclic wetting effect, a prediction model of accumulative strain was developed for compacted lateritic clay. By considering dynamic accumulative strain as static creep, a novel method for calculating subgrade long-term settlement was proposed. Moreover, a 3-D train-track-subgrade coupled dynamic model was established accounting for evolving contact stress between track and subgrade, and the effectiveness was verified. The influence of moisture content, cyclic wetting times and dynamic stress on the subgrade settlement evolution was analysed. The vertical carbody acceleration, Sperling index, derailment coefficient and wheel load reduction rate were selected as evaluation indexes to study the influence of cyclic wetting on train operation performance. The results show that the accumulative strain increases nonlinearly with the increase of wetting amplitude, existing a critical moisture content of 1.5% above the optimal moisture content, exceeding which the accumulative plastic strain increases significantly. The accumulative strain increases significantly when the moisture content exceeds the critical value. With the increase of moisture content, cyclic wetting times and dynamic stress, the accumulative deformation of lateritic clay gradually changes from a stable type to an incremental damage type. With the increase of train speed, the growth rate of carbody vertical acceleration and Sperling index accelerate, resulting in greater sensitivity to cyclic wetting. For safe operations of high-speed railway, it is not recommended that the subgrade moisture content exceeds the critical moisture content.