Public transit system has become one of the targets of terrorist attacks using explosives, examples of which include the 1995 attack on Paris subway and the 2004 attack on Moscow subway.  Under the present context of intense threats of terrorist attacks on subway systems in metropolitan areas around the world, explicit three-dimensional Finite Element method was used to investigate the dynamic response and damage of subway structures under internal blast loading.  The study was motivated by the fact that explosion in subway structure may not only cause direct life loss, but also damage the subway structure and lead to further loss of lives and properties.  The study used the New York subway system as background, and investigated the influences of various factors on the possible damage of subway tunnel, including weight of explosive, ground media, burial depth and characteristics of blast pressure.  A mitigation measure using grouting to improve ground stiffness and strength was also analyzed.  Considering the amount of explosive terrorists may use, the present study focused on smalldiameter single-track tunnels, which are more vulnerable to internal blast loading and are common in New York City.  Blast pressure from explosion was applied to lining surface assuming triangle pressure – time diagram, and the elasto-plasticity of ground and lining as well as their nonlinear interaction was taken into account in the numerical model.  It is found from the numerical study that maximum lining stress occurred right after explosion, before the blast air pressure reduced to the atmospheric one, and it was more dependent on the maximum magnitude of air pressure than on the specific impulse, which is the area below the pressure – time curve.  Small tunnels embedded in soft soil, with small burial depth, might be permanently damaged even by modest internal explosion that may be perpetuated by terrorists, the retrofit of existing subway structures and design of new ones may therefore need to seriously take into account internal blast loading if the tunnels have such characteristics.