The massive mechanized and irrational coal mining has generated many goafs (i.e., mined-out areas) in China. To manage these goafs effectively, grouting technique has been commonly used to fill the fractures in the overburden strata. However, little is known about the development and distribution of fractures in the overburden strata above the goaf. The lab-scale simulation of fracture development, as well as the grouting process, can provide valuable information for managing a real goaf by the grouting technique. Based on the mechanical properties of rocks and soils in the goaf of Kangjiagou coal mine in Shanxi Province, an experimental system was designed to simulate the development of fractures in the overburden strata above the goaf and study the diffusion behaviors of the grout slurry under different conditions (such as grout volume, grouting pressure, porosity, and water-solid ratio). The physical model test showed that more fractures were found in the fractured and caved zones, with fracture porosity ranging from 15.05 to 40.79%. The grouting experiment showed that, when the water-solid ratio was smaller than 1.15 and the grouting pressure was lower than 0.3 MPa, the changes in diffusion radius were stable during the grouting process. To maintain the stable changes in diffusion radius and reach a high filling ratio, the grouting pressure should be controlled in the range of 0.2–0.4 MPa at the porosity of 24.8% and 0.5 MPa at the porosity of 35.1%. The findings derived from this study are widely applicable under real engineering contexts.