<p>Seismic analysis of gravity dams is complex due to interactions between the dam, reservoir, and foundation, especially for masonry dams with inherently discontinuous structures. This study investigates the seismic behavior of masonry gravity dams using a coupled finite difference method and discrete element method (FDM–DEM) approach, incorporating the improved Barton–Bandis model to account for crack opening effects on joint tensile stress. The model simulates full reservoir conditions to capture hydrodynamic interactions, with fracture conductivity directly linked to mechanical deformation and fluid pressure. Validation is performed using the Koyna dam in India, examining two failure modes: separation and hydraulic fracturing. Results indicate that incorporating reservoir interaction leads to significantly higher peak displacements compared to the added mass method, highlighting the importance of fluid–structure interaction. Cracks initiate in high tensile stress zones, particularly near the dam crest and neck, consistent with expected patterns. Additionally, seismic analysis of the Gabiet masonry dam in Italy under six earthquake records reveals that failure mechanisms vary depending on loading conditions, underscoring the vulnerability of masonry dams to seismic events.</p>