Presented here are the results of seismic wave velocities analyzed using the acceleration time‐histories recorded at the downhole strong motion array of the Lotung large scale seismic test site during the May 20, 1986 Hualien earthquake. The spectral ratios between the surface and downhole accelerograms were used to identify the frequencies of maximum amplification of soil layers, and an elastic 1‐D wave propagation model was proposed to estimate the wave velocities of the ground during the earthquake. The results obtained indicate that significant reduction of shear wave velocity as well as soil modulus was induced by earthquake excitation as compared to the values obtained from low strain level soil testings.