The geometric nonlinear finite element method is used to analyze the impact mechanism of dynamic compaction. Damping of P wave and S wave are introduced to illuminate the material characters of the soil in the model. The improved artificial boundary conditions are applied to simulate wave propagation at the boundary. Two evaluation criterions (velocity criterion and acceleration criterion) are used to estimate the vibration influence to obtain the safe vibration range. The trench is an effective method of vibration isolation; and various influencing factors of trench are studied to give valuable reference for the engineering practice.