For the seismic vulnerability analysis method of masonry pagodas, the dynamic characteristic of the Bayun Pagoda in China was conducted by using environmental excitation technology. A numerical model of the masonry pagoda was established with the finite element software Abaqus. Ten seismic waves were selected as excitation signals to conduct incremental dynamic analysis (IDA) on the pagoda. The Sa(T1,5%) served as the seismic intensity indicator, whereas the damage factor (d) and relative stress () were employed as damage indicators for seismic vulnerability analysis of the pagoda. The failure probability of the structure reaching the limit state under different seismic intensities was determined. The results indicate that, comparing the IDA curves and seismic vulnerability curves under two different damage indicators, the Sa(T1,5%) range required for the IDA curves under the damage factor (d) is smaller than the relative stress (), with lower dispersion. Additionally, the failure probability of the pagoda reaching different limit states is higher under the damage factor (d). Considering the existing damage status of the masonry pagoda, the damage factor (d) is more reasonable as the damage indicator.