Abstract: An implementation of the smoothed particle hydrodynamic (SPH) method is adopted to investigate underwater explosion near air-water surface. The interaction between the water and the air during the process of explosion is investigated. The SPH method, as a kind of meshfree, provides a very attractive approach in dealing with large deformations and multi-material interactions. A two-dimensional SPH code is developed to simulate the complex physical phenomenon of underwater explosion near air-water surface. The distributions of the density and the pressure have also been qualitatively analyzed, and some interesting results have been obtained. Finally, the results show that the SPH method can represent the physical process of underwater explosion near air-water surface. The ability of SPH method in simulating compressible multi-fluid flows has also been certified.