In this paper, time domain transient analysis of dam-reservoir interaction is studied. Resulting hydrodynamic pressure is exactly calculated including the effect of vertical component of earthquake acceleration as well as the horizontal component. Method of separation of variables is applied to solve resulting partial differential equation after applying Laplace transform. Sommerfeld’s boundary condition is used in far end of the infinite reservoir. Finally, a comparison is made between the results of the case involving both horizontal and vertical accelerations and the case of applying vertical component only using El Centro earthquake (1940) data.