Nodular diaphragm wall (NDW) is a novel foundation type with favorable engineering characteristics. In contrast to traditional diaphragm walls, the vertical bearing capacity of NDW is significantly enhanced by the existence of nodular sections. Currently, the application and research of NDW are limited, and further clarification is needed regarding its deformation properties and failure modes. This study employs particle image velocimetry (PIV) technology to analyze the displacement and failure mechanisms of the foundation under vertical uplift. The findings indicate that positioning end and middle nodular sections extend the influence range to both deep and shallow soil layers, while multiple nodular sections facilitate in mobilizing broader spectrum of soil. The failure pattens of NDW involve interconnected sliding planes, including vertical sliding planes, inverted pyramid-shaped, or tangent curves, and vase-shaped curves (referred to as curve sliding planes). Overall, compared to pile foundations, the failure surfaces of the retaining wall exhibit complexity, influenced by the number and arrangement of sections, with certain sliding plane orientations correlated with the soil's internal friction angle.