In this paper, an exact truncation boundary condition is derived and implemented in a finite element code for the analysis of dam-reservoir interaction for incompressible, inviscid and unbounded fluid domains. The reservoir domain is divided into two regions in the derivation of the truncation boundary condition. These are the near field having a complex geometry and the far field with a uniform cross-section. The proposed boundary condition is obtained using the analytical solution for the far field and used as a truncation boundary condition at the truncation surface for the near field including the dam-reservoir system. This method has the advantage of geometrical flexibility in the near field and of being a semi-analytical approach giving close results to the exact solutions for the cases analyzed. In addition, accurate results are also obtained when the reservoir domain is truncated very close to the dam-reservoir interface. (c) 2006 Elsevier Ltd. All rights reserved.