In the paper, nonlinear dynamic analysis of a circular plate composed of functionally graded material (FGM) is presented. Considering a transverse shear deformation and geometric nonlinearity, the von Karman geometric relation of the FGM circular plate is established. Based on the theory of the first-order shear deformation, a new set of equilibrium equations is developed by the principle of minimum total energy. Applying the finite difference method and Newmark scheme, the nonlinear transient problem is solved by the iterative method. To validate the presented method, the transient problem of the FGM circular plate is compared with those of the existed literature, and good agreement is observed. The effects of the volume fraction index, boundary conditions, mechanical load and the ratio of thickness to radius on the nonlinear transient problem of the FGM circular plate are investigated.