ABAQUS code was used to establish a finite element model of prestressed embankment (PE) and the distribution characteristics of the additional confining pressure field in a PE with a lateral pressure plate (LPP) width of 1.2 m and a slope ratio of 1 : 1 were analyzed. Results indicate that with the increase of the horizontal depth from the embankment slope surface, the additional confining pressure field under the coverage region of the LPP gradually varies from an “abdominal drum shape” distribution in shallow layers to a relatively uniform distribution in deeper layers. The additional confining pressure in three external regions of the LPP initially increases to a peak value and subsequently decreases with increasing horizontal depth, and the prestress propagates to the core zones mainly bearing the loading with different peak stress diffusing angles. The peak stress diffusing angle in the region beyond the left and right sides of the LPD is greater than that in the region beyond the upper side, but less than that in the region beyond the lower side. The overall stability of a PE was analyzed based on the strength reduction method, and a design method/idea with corresponding implementing procedures was proposed for optimizing the LPP spacing. A series of large-scale static and dynamic triaxial tests on a typical railway embankment filling were performed, substantiating that PE could effectively improve the ability of the embankment soil to resist deformation and static and dynamic loads. An empirical formula correlating the critical dynamic stress with the confining pressure was established, which provides a reference for determining the required confining pressure increment for railway embankments.