One of the important aspects which may affect the seismic response of gravity dams is dam-reservoir-foundation interaction. The dam-reservoir interaction must be taken into account, since the dam undergoes deformation which influences the motion of water in the reservoir. Due to the complexity of a dam­reservoir-foundation system, the finite element method is an efficient tool for studying the dynamic response of such a system not only due to the complicated geometry of the dam-reservoir-foundation system but also due to the mechanism of incident earthquake waves and different boundary conditions which can be simulated more appropriately. In order to seismic analysis of gravity dams, a computational procedure for two-dimensional finite-element analysis of dam­reservoir­foundation systems subjected to seismic excitations is developed using Ansys software in this research. Water is assumed as a compressible, inviscid fluid with small amplitude displacements and the dam is modeled as an elastic solid. The analysis is carried out in time domain considering dynamic excitations. Newmark time integration scheme is developed to solve the time­discretized equations which are an unconditionally stable implicit method. An application of the procedure to a study of the seismic optimization of concrete gravity dams using hydrodynamic isolation layer under horizontal and vertical ground motions is presented and discussed. In this study, the hydrodynamic isolation layer is used for the geometry and seismic optimization of concrete gravity dams. For this purpose, the volume of dam body is considered as the objective function and constraints of various geometrical and structural behaviors in order to optimize the concrete gravity dam under seismic loading. To demonstrate the effectiveness of the developed numerical model, the response of Koyna dam in India due to Taft ground motion is presented as a case study to show the hydrodynamic isolation effects on seismic optimization of concrete gravity dams. The model was analyzed and compared for the cases in which the isolation layer attached along the upstream face of dam for different conditions. Consider to obtained results, it is revealed that the isolation layer can have the reducing effect on responses of dam model because of damping the induced hydrodynamic pressure due to earthquake.The layer reduces the dam response due to the hydrodynamics effect of the reservoir in essentially two different ways: (a) the layer serves as a boundary for the reservoir with a low reflection coefficient which results in reduction in the developed hydrodynamic pressure in the reservoir compared with the case of a completely reflective boundary. This effect was addressed in the previous part of the theoretical solution excluding the layer's isolation effects. (b) the isolation of the dam from the hydrodynamic pressure is the result of the layer thickness as well as its material properties which alter the amplitude of the transmitted pressure wave across the layer.