In order to investigate the influence of settlement-induced deformation on the safety and operational performance of ballastless track in the subgrade settlement section, a refined nonlinear analysis model for CRTSII slab ballastless track considering the structural reinforcement and inter-layer adhesion between track components was established based on the finite element method and concrete plastic damage constitutive theory. The effect of settlement position, wavelength, and amplitude on the deformation and damage of the track structure was studied. Furthermore, a dynamic coupling model of high-speed vehicle-track-subgrade system was established using the finite element-multi-body dynamics (FE-MBD) method to analyze the dynamic response of the coupled system under differential Settlement. The results indicate that when settlement occurs at the joint between the wide and narrow sections, the rail displacement is the largest, and macroscopic cracks occur first in the track slab. The vertical acceleration of the carbody and the vertical force between the wheel and the rail are sensitive to the settlement amplitude, showing an obvious increasing trend with the increase in settlement amplitude. The vertical force between the wheel and the rail, as well as the vibration response of the track structure, exhibit an increasing trend followed by a decreasing trend with the increase in settlement wavelength. Settlement-induced deformation and its increased amplitude below a settlement wavelength of 15m have a significant impact on the dynamic response of the vehicle-track system and should be given due attention. The research conclusions can provide reference for the operation of high-speed railways in subgrade settlement areas and the prevention and control of uneven settlement-related track diseases.