The response of an embedded body to dynamic loads is greatly influenced by the reactions of the soil to the motion of the body. The properties of the soil surrounding embedded bodies (e.g., piles) may be different than those of the far-field for a variety of reasons. It may be weakened or strengthened according to the method of installation of piles, or altered due to applying one of the soil strengthening technique (e.g., electrokinetic treatment of soil, El Naggar et al. 1998). In all these cases, the shear strength of the soils and its shear modulus vary gradually in the radial direction, resulting in a radially inhomogeneous soil layer. This paper describes an analysis to compute vertical and torsional dynamic soil reactions of a radially inhomogeneous soil layer with a circular hole. These soil reactions could then be used to model the soil resistance in the analysis of the pile vibration under dynamic loads. The soil layer is considered to have a piecewise, radial variation for the complex shear modulus. The model is developed for soil layers improved using the electrokinetic technique but can be used for other situations where the soil properties vary gradually in the radial direction (strengthened or weakened). The soil reactions (impedance functions) are evaluated over a wide range of parameters and compared with those obtained from other solutions. A parametric study was performed to examine the effect of different soil improvement parameters on vertical and torsional impedance functions of the soil. The effect of the increase in the shear modulus and the width of the improved zone is investigated.