To address the limitation that current studies on subgrade seepage stability often simplify fills as homogeneous materials, this research investigated the effect of anisotropy in permeability by considering horizontal and vertical coefficients. Firstly, laboratory tests were conducted to examine the variation of horizontal and vertical permeability coefficients of fills with dry density. Subsequently, field tests were carried out to analyze the hydraulic response characteristics of river-side subgrade under fluctuating water levels. Finally, numerical simulations were performed to discuss the influence of permeability coefficient anisotropy on subgrade stability. The results indicate that the ratio of horizontal to vertical permeability coefficients of fill is closely correlated with dry density. During the initial stages of water level decline, significant changes in volumetric water content and pore water pressure are observed at monitoring points within the subgrade. Neglecting permeability coefficient anisotropy may lead to an underestimation of subgrade instability risks under declining water level conditions. Furthermore, higher rates of water level change coupled with more pronounced permeability coefficient anisotropy in the fill correspond to lower safety factors of the subgrade. The study result can enhance the rationality of the subgrade stability design under water level change conditions, which provides valuable insights for the design of road subgrades in flood detention and retention areas.