Abstract: Building clusters as “scatterers” and “secondary sources” will change the seismic wave propagation in the site under earthquakes. Seismic damage investigation results of the 1976 Friuli earthquake and the 1985 Mexico earthquake revealed that the building damages had the spatial distribution of alternating destruction. Additionally, many cities and towns in China are located in sedimentary basins. Sedimentary basins have significant amplitude-amplifying and duration-increasing effects on ground motion. The dynamic interaction between the sedimentary basin and buildings leads to spatial redistribution and significant spatial variation of ground motions. Thus, this paper proposes a framework for earthquake damage assessment of buildings considering the dynamic interaction between buildings and the sedimentary basin. Firstly, simplified mechanical models including the shear layer model and flexural-shear model are used to simulate building structures; and the dynamic interaction between buildings and the sedimentary basin is calculated to obtain the ground motions on the top surface of the building foundations. Then, the seismic vulnerability of a typical single building is analyzed based on a refined finite element model with fiber-beam and layered shell elements. Finally, combined with the ground motions of foundations and vulnerability curves of buildings, earthquake damage assessment of buildings is realized rapidly. The results show that the influence of the superstructures on ground motions on the top of the foundations is equivalent when the simplified mechanical model and the refined finite element model are used to simulate building structures. The proposed method is suitable for earthquake damage assessment of building groups considering the dynamic interaction between buildings and basins. However, there are significant differences in solving the seismic response of building clusters using simple mechanical models and refined finite element models. Therefore, it is necessary to comprehensively consider the size of building clusters, and the importance and complexity of buildings in urban areas in seismic damage assessment. A multi-scale method is suitable. The dynamic interaction between buildings and basins mainly reduces the peak value of the surface ground motion in the basin, however, the local location will produce additional amplification based on the basin effect. The interaction between the buildings and the basin causes a three-time difference in the peak values of the acceleration response spectrum at different surface locations. At the same time, the difference in the probability of earthquake damage of the same level in neighboring buildings is magnified. In the analyzed example, when the interaction of building group and basin is considered or not considered, the medium damage probability ranges of the same four adjacent buildings are 66%−92% and 87%−93%, respectively, which is consistent with the earthquake damage phenomenon of building structures in the previous earthquakes. The proposed method takes the failure probability of building structures as the assessment index, which can be solved through seismic vulnerability analysis of individual building structures or directly extracted from the seismic vulnerability database. Compared with dynamic time-history analysis results of building clusters, this index is more suitable for predicting unfavorable locations or buildings before earthquakes, especially for communities with relatively unitary building-types. The failure probability of the entire community can be obtained by combining the seismic vulnerability of typical building structures with the peak ground acceleration at the building foundations.