The significance of predicting the dynamic response and damage of an existing concrete tunnel during underground blasting has increased owing to the close proximity between the newly built and existing tunnels. Peak particle velocity (PPV) is a commonly used criterion in the assessment of blast-induced structural damage. However, such structural damage is also associated with the frequency content of the blast wave. Nevertheless, the recommended threshold PPVs, which are based on empirical criteria, predict conservative estimations. Using stringent and regulated blasting methods often results in project delays and escalates the total project expenditure. In this paper, a three-dimensional finite element model of an underground tunnel has been developed in LS-DYNA to analyze damage to the concrete tunnels under blast loading. A suite of analyses was performed to examine the potential damage induced in the underground tunnel. A lower frequency load was found to have a greater potential for producing damage compared with a high frequency blast load. The results showed that the location of the cracking within the tunnel, such as the arch foot or tunnel wall, was also influenced by the frequency of the blast wave. The maximum allowable PPV for the concrete tunnel was determined for a range of frequencies based on predicted free field PPV and additional factors of safety of 1.2 and 1.5 were established, depending on the safety needs and importance of the tunnel construction. Thus, our findings provide useful information for improving the evaluation of tunnel damage and guaranteeing the safety of underground tunnels.