Dynamic compaction is a well known method of soil improvement. In this method, a tamper falls from a specified height on the soil and results in energy spreading through its body, increasing horizontal and vertical stresses and relative density. In present study, finite element method is used for numerical modeling of dynamic compaction phenomenon. ABAQUS 6.10-1 software is used for two dimensional modeling of dynamic compaction in dry sands. Cap plasticity model is used as the constitutive model and the variation of peak ground velocity and peak ground acceleration are investigated. Considering PGV of 76 mm/s as the maximum value for mitigation of structural hazards in this research, critical distance of dynamic compaction process from adjacent structures is determined and applicable patterns are recommended. Moreover, effect of initial soil density on the calculated critical distance is evaluated considering different SPT N-values. Based on the results, effect of soil density on the critical distance is low and reduces with the increase in compacted alluvium depth.