Dispersive soils used in the core of earth-rockfill dams are prone to particle dispersion and erosion. Lime treatment can effectively suppress soil dispersivity but the induced changes in mechanical properties may further influence the overall stress state and dynamic response of the dam. Taking the QDKS reservoir project in Ili, Xinjiang, as a case study, static and dynamic finite element analyses were conducted for both construction and impoundment stages based on the Duncan-Chang E-B model and the equivalent linear method to comparatively investigate the stress distribution, deformation characteristics, and dynamic responses of the dam and core wall under untreated and lime-treated conditions. The results indicate that the introduction of a lime-improved reinforcement layer significantly reduces vertical settlement, promotes a more uniform stress distribution, and increases the compressive stress level in the core wall, thereby improving the structural stress condition. Under seismic loading, acceleration and dynamic displacement exhibit clear amplification along the dam height with peak values occurring at the dam crest. The lime-improved layer further modifies the dynamic response distribution between the core wall and the dam body, leading to more coordinated overall responses and improved deformation performance of the core. The findings provide references for seismic design and core reinforcement of earth-rockfill dams in dispersive soil regions.