A bond-based peridynamic methodology is used to investigate failure induced by dynamic unloading of highly stressed rocks. A combined static and dynamic PD approach is introduced along with its numerical implementations are proposed to simulate the behavior of geo-materials subjected to various loading conditions. To validate/verify the proposed method, simple three-point bending test and dynamic unloading of a pre-pressure rock bar are simulated. The simulation results are compared with the theoretical results as well as experimental results to assess the reliability of the proposed algorithm. The damage caused by the dynamic unloading of rocks under different initial stress states are simulated. The mechanism of crack generation in the rocks is analyzed using the Mohr’s Circle. Finally, the damage caused by the dynamic unloading in the surrounding rock of a deep circular tunnel is simulated. PD method can effectively simulate the generation and development of rock cracks caused by dynamic unloading, and can also simulate the damage during excavation. This provides a new insight into the integrity of rock masses subjected to dynamic unloading.