An analytical solution to the transient dynamic response of a cylindrical lining subjected to an internal loading was presented and the dynamic interaction between the lining and surrounding soil was considered. The lining structure and the soil were treated as a cylindrical elastic shell and an infinite elastic compressible medium, respectively. A two-dimensional axisymmetric wave equation was derived from the governing equation of displacement by introducing the potential functions. Shell equation of motion was established based on continuity conditions. The closed-form solution for dynamic response of the lining due to an impact loading was obtained in Laplace transforms and inverse transforms. Detailed parametric studies were also presented to illustrate the influences of the Poisson ratio of soil, the dynamic shear moduli of both soil and lining and the thickness of lining on dynamic response of the lining.