As dams are large structures often constructed on rock formations exhibiting material non-homogeneity, anisotropy and non-linear behavior, a complete stress-deformation analysis is required to arrive at a proper design. Shear zones and seams encountered in the rock foundation of these structures are responsible for undesirable deformations and stress concentrations in the dam-foundation system. The presence of shear seam at any location and inclinations weakens the dam-foundation system. As the deformations and stress distribution in the foundation are highly influenced by the locations and inclinations of shear seam, intensive analysis of each cases need to be carried out. The paper presents a discontinuum analysis of a dam-foundation system under the influence of shear seam originating at heel and toe of the dam has been carried out using distinct element method. The inclination of the seam is considered as a critical parameter in defining the stress-deformation response of a dam-foundation system. The paper focuses on the stress-deformation analysis of a dam-foundation system carried out using UDEC.