Water tanks are an essential lifeline whose continuing availability and serviceability immediately after earthquake events are crucial for providing undisrupted emergency services. Their seismic performance is, therefore, of paramount importance. The seismic response of an elevated liquid tank situated on a soft soil deposit was studied by means of field vibration tests and numerical simulations. The ambient and forced vibration tests were conducted to identify the soil-structure interaction (SSI) effects on the small strain dynamic behavior of the structure. A series of time domain numerical analyses were performed to evaluate the seismic performance of these structures from a performance based design point of view. The results showed that consideration of SSI increased the displacement demand significantly. Thus, the calculated maximum displacement demand for supporting frame components of the tank may be underestimated significantly when the SSI effects are neglected. In addition, the seismic induced shear forces considering SSI effects were much smaller than the seismic shear forces for the fixed based case. For some soil types, the effect of this reduction on the overall response may become more prominent than the structural ductility mechanism. This resulted in the failure mechanism being initiated by a coupled compression - bending moment effect, rather than shear failure. Finally, the sloshing response is significantly increased due to the SSI.