Abstract: Effect of dynamic dam-reservoir-foundation interaction, particularly, foundation stiffness and foundation anisotropy on the seismic response of concrete dams was studied. The scaled boundary finite element method presented by Wolf and Song was employed for this investigation. Numerical analyses of the complex frequency response and the time history earthquake response of Koyna dam for various cases of foundation stiffness and foundation anisotropy were performed. It was found that the foundation stiffness and foundation anisotropy play important role in the interaction analysis. The seismic response of dams grows with increase of foundation stiffness especially, when the foundation stiffness increases along with the depth. In addition, the applicability of the widely used massless foundation approach to the dam-foundation interaction analysis is discussed.