An efficient method for seismic reliability assessment of lifeline networks, such as water distribution systems and communication or transportation networks, is developed. Lifeline component failures resulting from ground shaking and fault differential movements are analyzed using structural performance functions given in terms of earthquake variables. An improved fault-rupture model which considers the ruptured area produced by an earthquake on the fault plane is utilized. A new, polynomially bounded method for computer lifeline network reliability is developed. It is shown that for a fixed earthquake magnitude on a fault, the network will take on at most 2 n stages where n is the number of network components. Computing the seismic reliability of large networks becomes feasible using these new techniques. A water distribution system is analyzed using newly developed computer programs.