Numerical simulation of dam-foundation-fault system, considering the earthquake source, propagation path, and local site eects, was carried out for realistic and reasonable seismic safety analysis of concrete dams. The Domain Reduction Method (DRM) was used for seismic analysis of Dam-Foundation-Fault (DFF) system, in which a modular two-step methodology for reducing the computational costs in large domain analysis was introduced. In this method, seismic excitation is directly applied to the computational domain such that assigning articial boundary to the nite element models is more comfortable. In order to verify the implementation of the DRM in Finite Element Method (FEM), a simple 2D half-space under the Ricker wavelet excitation was examined. Then, to investigate the DRM as an appropriate method in seismic analysis of DFF system, the Koyna concrete gravity dam was modeled. Comparing the obtained results by usingboth the DRM in a small domain and the traditional approach in the large domain containing the source shows the eciency of the DRM in terms of computational costs, such as running time and number of elements for seismic analysis of concrete gravity dams.