To investigate the influence mechanisms of diaphragm walls on the dynamic responses of a segmental underpass tunnel subjected to earthquake loadings, a three-dimensional finite element model of an underpass tunnel in soft soil was established. Representative seismic responses, including the inter-story displacements, acceleration, internal forces, and tensile damage of the underpass tunnel structure with and without diaphragm walls, were comparatively analyzed. The research results show that when the seismic intensity is 0.05g, the inter-story displacements of open U-shaped retaining walls, peak acceleration of the buried frame’s top and bottom slabs, and structural tensile damage are significantly reduced due to inclusion of the diaphragm walls, in which they exert beneficial effects on the underpass tunnel overall. However, when the seismic intensity is 0.215g, the inter-story displacements of the shallowest buried segment, peak acceleration of the top and bottom slabs for most of buried segments, shear forces at the top of the side walls, as well as structural axial forces and tensile damage at two ends of the central columns, are dramatically enlarged due to inclusion of the diaphragm walls, suggesting that their unfavorable effects become prominent. The result reveals the dual effect of diaphragm walls on the seismic responses of an underpass tunnel, and clarifies the differential effects of diaphragm walls on the dynamic responses and damage-failure patterns of different structural segments. The findings of this study can serve as a reference for seismic design of similar structures.