The increasing importance of performance-based earthquake engineering analysis points out the necessity to assess quantitatively the risk of liquefaction of embankment-type structures. In this extreme scenario of soil liquefaction, devastating consequences are observed, e.g., excessive settlements, lateral spreading and slope instability. The present work discusses the global dynamic response and interaction of an earth structure-foundation system, so as to determine quantitatively the collapse mechanism due to foundation’s soil liquefaction. A levee-foundation system is simulated, and the influence of characteristics of input ground motion, as well as of the position of liquefied layer on the liquefaction-induced failure, is evaluated. For the current levee model, its induced damage level (i.e., induced crest settlements) is strongly related to both liquefaction apparition and dissipation of excess pore water pressure on the foundation. The respective role of input ground motion characteristics is a key component for soil liquefaction apparition, as long duration of mainshock can lead to important nonlinearity and extended soil liquefaction. A circular collapse surface is generated inside the liquefied region and extends toward the crest in both sides of the levee. Even so, when the liquefied layer is situated in depth, no significant effect on the levee response is found. This research work provides a reference case study for seismic assessment of embankment-type structures subjected to earthquake and proposes a high-performance computational framework accessible to engineers.