We numerically simulated the propagation of tsunami waves with finite difference methods by using perfectly matched layer (PML) boundary conditions to effectively eliminate artificial reflections from model boundaries. The PML method damps the tsunami height and velocity of seawater only in directions perpendicular to the boundary. Although the additional terms required to implement the PML conditions make the use of the PML technique difficult for linear dispersive tsunami waves, we have proposed an empirical extension of the PML method for modeling dispersive tsunami waves. Even for heterogeneous, realistic bathymetries, numerical tests demonstrated that the PML boundary condition dramatically decreased artificial reflections from model boundaries compared to the use of traditional boundary conditions. The use of PML boundary conditions for numerical modeling of tsunamis is especially useful because it facilitates use of the later phases of tsunamis that would otherwise be compromised by artifacts caused by reflections from model boundaries.