<p>The submerged floating tunnel (SFT) is a novel marine floating structure that could provide an alternative solution for strait-crossing engineering under deepwater and large-span conditions. In marine environments, extreme waves due to typhoon weather and loosely deposited seabed soils with poor capacity pose a serious threat to the serviceability of the SFT. It is meaningful to explore the dynamic response and possible failure mechanism of SFTs under extreme waves. Restricted by the limitations of current simulation methods, most numerical studies thus far have utilized decoupling methods and ignored the existence of seabed foundations, resulting in an unreasonable understanding of the dynamic behaviors of SFTs. In this study, a self-developed numerical software, FssiCAS, based on a computational fluid dynamic (CFD)–finite element method (FEM) coupling algorithm is adopted to investigate the dynamic response of the seawater–SFT–mooring cable–mat foundation–seabed system under the attack of extreme waves via a full-scenario analysis. The generalized plastic (PZ III) constitutive model is employed to describe the elastoplastic complicated behaviors of the liquefiable seabed soil, and the geometric nonlinear characteristics of the mooring cables are also considered. The possible failure pattern of the SFT is determined by analyzing the dynamic behaviors of the SFT and seabed foundation. It is demonstrated that the plastic deformation and bearing capacity loss of the seabed foundation induced by liquefaction are one of the fundamental reasons for the potential failure of the SFT. The methodology proposed could provide a valuable framework and computational platform for the design, dynamic analysis, and stability assessment of SFTs.</p>