Purpose <p>Functionally graded (FG) panels are widely used in various critical components of aircraft and automobile structures which are often subjected to a dynamic loading in extreme hygro-thermal environment, characterised by high temperature and moisture concentration. The purpose of the present research work is to develop a non-linear strain based finite element (FE) model for the dynamic response analysis of FG panels in hygro-thermal environment.</p> Methods <p>A FE model based on the first order shear deformation theory is developed for FG panels in the MATLAB (ver. R2022b) platform. Uniform change in both temperature and moisture concentration through the thickness of FG panels is considered for simulating hygro-thermal environment. Non-linear strain terms are incorporated in the present FE model for addressing the hygro-thermal effect which give rise to the residual stresses within the FG panel. These hygro-thermal strains are then corelated with the residual stresses to form a geometric stiffness matrix to consider the changes in the FG panel’s response due to hygro-thermal environment and the governing dynamic equation is updated.</p> Results <p>Considering the temperature dependent material properties, detailed numerical simulations are carried out to evaluate free and forced vibration responses of FG panels with different constituent materials by varying power law indices, thickness of the plate and boundary conditions under different hygro-thermal conditions.</p> Conclusion <p>The dynamic response of FG panels is significantly influenced by hygro-thermal environment. The present FE model can be utilized by the engineers to analyse and optimise the dynamic response of FG panels before their actual implementation.</p>