Stability of large room-and-pillar panels, which is a function of mechanical response of typically large number of pillars and deformation of the overburden on the scale of the entire panel, could be a challenging problem to analyze because it requires consideration of deformation and damage of rock mass occurring at different length scales. Panel stability is a function of response of both pillars and the overburden, and when the room-and-pillar panels collapse very often it is not clear if it is a consequence of pillar or overburden failure. Two-scale analysis approach is presented here. Pillars are analyzed first in a pillar-scale model with necessary discretization to represent stress-strain concentrations and high-strain gradients. The derived pillar stress-strain curves then are used in the panel-scale analysis of deformation and stress redistribution over the panel, in which the pillars are represented in an average sense (on the level of tributary area). The methodology for approximation of pillar response and calculation of pillar average properties is presented in the paper. Further, the "ground-reaction curve" approach is proposed for stability assessment of room-and-pillar panels.