The effects of the sediment on the earthquake response of concrete gravity dams subjected to horizontal and vertical asynchronous ground motion are investigated including dam-reservoir-sediment-foundation interaction in this paper. Dam-reservoir-sediment-foundation interaction is modeled by the finite element method. The equations of motion of the dam-reservoir-sediment-foundation system are determined using the Lagrangian approach. Solutions are obtained for dam-reservoir-foundation and dam-reservoir-sediment-foundation systems separately. Parametric studies were conducted in order to investigate the effects of the variation of Young's modulus and thickness of the sediment on the dam response. Seismic wave velocities of 250, 3000 m/s and infinite are used in calculations. It is observed that stresses near the dam crest decrease considerably when the sediment is included in the analyses. The variation of the values of Young's modulus and thickness of the sediment influences the stress component slightly.