True-triaxial compression tests were carried out on cubic granite samples with a circular through hole using a true-triaxial testing system to investigate the influence of saturated water content (SWC) on the failure process and characteristics of a circular tunnel of surrounding rocks. The spalling failure under SWC can be divided into four periods: calm period, buckling deformation period, period of rock fragment gradual buckling and exfoliation, and period of formation of symmetrical V-shaped notches. When the horizontal axial and vertical stresses were constant, the spalling failure severity was reduced with the increase in lateral stress. Under natural water content, a strong rockburst with dynamic failure characteristics occurred on the circular hole sidewall. Under SWC, the failure severity was reduced and the circular hole sidewall experienced spalling failure, exhibiting progressive static failure characteristics. Therefore, water can reduce the failure severity of surrounding rocks in deep underground engineering, which has a certain guiding significance for the prevention and control of rockbursts.