This paper presents a dynamic crack propagation algorithm with Rayleigh damping effect based on the MLS(Moving Least Squares) Difference Method. Dynamic equilibrium equation and constitutive equation are derived by considering Rayliegh damping and governing equations are discretized by the MLS derivative approximation; the proportional damping, which has not been properly treated in the conventional strong formulations, was implemented in both the equilibrium equation and constitutive equation. Dynamic equilibrium equation including time relevant terms is integrated by the Central Difference Method and the discrete equations are simplified by lagging the velocity one step behind. A geometrical feature of crack is modeled by imposing the traction-free condition onto the nodes placed at crack surfaces and the effect of movement and addition of the nodes at every time step due to crack growth is appropriately reflected on the construction of total system. The robustness of the proposed numerical algorithm was proved by simulating single and multiple crack growth problems and the effect of proportional damping on the dynamic crack propagation analysis was effectively demonstrated.