A simplified method for earthquake response analysis of a rectangular liquid storage tank is proposed with fluid-structure interaction considered. In order to simplify the complex three-dimensional structural behavior of a rectangular liquid storage tank, it is assumed that structural deformation does not occur in the plane parallel to the direction in which the earthquake ground motion is applied but in the plane perpendicular to the direction. The structural deformation is approximated by combining the natural modes of the simple beam and the cantilever beam. The hydrodynamic pressure, the structure’s mass and stiffness, and the hydrodynamic pressure’s added mass are derived by applying the Rayleigh-Ritz method. The natural frequency, structural deformation, pressure, effective mode mass, and effective mode height of the rectangular liquid storage tank are obtained. The structural displacement, hydrodynamic pressure, base shear, and overturning moment are calculated. The seismic response analysis of an example rectangular liquid storage tank is performed using the proposed simplified approach, and its accuracy is verified by comparing the results with the reference solution by the finite element method. Existing seismic design codes based on the hydrodynamic pressure in rigid liquid storage tanks are observed to produce results with significant errors that cannot be ignored.