Embedded turnout is one of the key facilities in the embedded track network of modern tram systems. In this study, the damping performance and track stiffness of an embedded turnout are tested on site. A multi-rigid body dynamics model of the tram and a finite-element dynamics model of the embedded turnout are established, and the two models are coupled based on the wheel-rail contact theory for the turnout area. Next, the dynamic responses of the tram passing through the embedded turnout are analyzed. The results show that the embedded turnout has favorable damping performance. The high stiffness of variable section rails at the switch and frog would lead to an increase in the wheel-rail dynamic force. When the tram passes through the embedded turnout, the wheel-rail vertical force reaches maximum values of 106.3 and 35.2 kN at the frog and switch, respectively; the maximum wheel derailment coefficient and wheel weight reduction rate are 0.49 and 0.57, respectively, which are within the safety limit specified in the Standards; the maximum lateral and vertical vibration accelerations of the tram body are 0.38 and 0.71 m/s2, respectively, satisfying the comfort requirements; the wheel–rail wear work at the switch is greater than that at the frog.