This paper deals with the application of joint element in the finite element modeling of discontinuities encountered during rock tunneling. A nodal displacement joint element was implemented in a two dimensional finite element program GEOFE2D. The applicability of the joint element for modeling of discontinuities and the numerical stability of the implemented algorithm were examined by comparing the results of reduced small scale model tests as well as commercially available FEM program. The GEOFE2D was then used to analyze a tunnel crossed by a major discontinuity for the purpose of understanding the effect of discontinuity on the tunnel behavior. In addition, a modeling technique for the junction of discontinuity and shotcrete lining was presented. The results of analysis indicated that the stress-strain field around the tunnel is significantly altered by the presence of discontinuity, and that the stresses in the shotcrete lining considerably increase at the junction of the shotcrete lining and the discontinuity. It is therefore concluded that the major discontinuities must be carefully modeled in the finite element analysis of a tunneling problem in order to obtain more reliable results close to actual tunnel behavior.