Due to the compact space and high utilization demands, the construction of large underground subway transfer station in urban area, like Pengcheng Square station in Xuzhou, China, was confronted with various obstacles, such as nearby surface and subsurface structures, heavy road traffic, and clay-rock mixed ground conditions. Based on careful investigations to all surrounding limitations, an innovative composite station form and its corresponding construction method, open cutting with underground excavation (OCUE) method, were introduced. The construction performance of this method has been confirmed by field monitoring. The main findings from the research include: (1) Sophisticated design and construction is essential for satisfying the expected functions of the station, minimizing the influence on the heavy traffic and sensitive structures in adjacent, as well as tackling the adversities of the clay-rock mixed strata; (2) Supported by the OCUE method, composite form of subway station was delicately designed to maximize the utilization of limited space, it comprised of open cutting part, underground excavation part and half-covered excavation part; (3) The implementation of OCUE method was successful with little influence on the surrounding traffic and buildings. Experiences obtained from this project can provide effective reference for similar cases.