An important issue in the design of soil-nailing systems, as long-term retaining walls, is to assess their stability during seismic events. As such, this study is aimed at simulating the dynamic behavior and failure pattern of nailed structures using two series of numerical analyses, namely dynamic time history and pseudo-static. These numerical simulations are performed using the Finite Difference Method (FDM). In order to consider the actual response of a soil-nailed structure, nonlinear soil behaviour, soil-structure interaction effects, bending resistance of structural elements and construction sequences have been considered in the analyses. The obtained results revealed the efficiency of both analysis methods in simulating the seismic failure mechanism. The predicted failure pattern consists of two sliding blocks enclosed by three slip surfaces, whereby the bottom nails act as anchors and the other nails hold a semi-rigid soil mass. Moreover, it was realized that an increase in the length of the lowest nails is the most effective method to improve seismic stability of soil-nailed structures. Therefore, it is recommended to first estimate the nails pattern for static condition with the minimum required static safety factor. Then, the required seismic stability can be obtained through an increase in the length of the lowest nails. Moreover, placement of additional long nails among lowest nails in existing nailed structures can be considered as a simple retrofitting technique in seismic prone areas.