Many cities and towns in China are located in sedimentary basins. Sedimentary basins have significant amplifying and duration-increasing effects on ground motion. The dynamic interaction between the sedimentary basin and buildings leads to spatial redistribution and significantly spatial variation. Thus, a " multi-step method " for earthquake damage assessment of buildings considering dynamic interaction between buildings and the basin is proposed in this paper. Firstly, simplified mechanical models such as the shear and flexural-shear models are used to simulate structures, and the dynamic interaction between buildings and the sedimentary basin is calculated to obtain the ground motion on the top of the foundations. Then, the seismic vulnerability of a typical single building is analyzed based on a refined finite element model. Finally, combined with the ground motion of foundations and vulnerability curves of buildings, earthquake damage assessment of buildings is realized. 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 can be applied to earthquake damage assessment of building groups considering the dynamic interaction between buildings and basins; 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. For the same frame structure and frame shear wall structure, the probability of severe damage can differ approximately 40% and 25%, respectively, because of the basin effect and interaction between the basin and buildings.