This paper focuses on the numerical analysis of reinforced soil retaining walls using finite difference programme, FLAC. In the analysis, behaviour of soil-wall interaction, soil-reinforcement interaction has been considered. Dynamic loadings were applied in the form of sinusoidal waves at the base of the foundation soil. Analyses were conducted using different backfill conditions and loading conditions. The lateral displacement and earth pressure were analyzed in order to evaluate the effect of reinforcement on the retaining wall. Comparisons were made between unreinforced (conventional) and reinforced soil retaining wall. It was observed that the reinforcement affects the earth pressure as well as lateral displacement of the retaining wall significantly. Parametric studies were also performed to understand the mechanism of reinforced soil retaining wall. The results of this study reveal the advantages of reinforcement in order to reduce the damages caused by the earthquake.