The problem of laterally loaded piles is particularly a complex soil-structure interaction problem. The flexural stresses developed due to the combined action of axial load and bending moment must be evaluated in a realistic and rational manner for safe and economical design of pile foundation. The paper reports the finite element analysis of pile groups. For this purpose simplified models along the lines similar to that suggested by Desai et al. (1981) are used for idealizing various elements of the foundation system. The pile is idealized one dimensional beam element, pile cap as two dimensional plate element and the soil as independent closely spaced linearly elastic springs. The analysis takes into consideration the effect of interaction between pile cap and soil underlying it. The pile group is considered to have been embedded in cohesive soil. The parametric study is carried out to examine the effect of pile spacing, pile diameter, number of piles and arrangement of pile on the responses of pile group. The responses considered include the displacement at top of pile group and bending moment in piles. The results obtained using the simplified approach of the F.E. analysis are further compared with the results of the complete 3-D F.E. analysis published earlier and fair agreement is observed in the either result.