Using the curved grid finite‐difference method, we develop dynamic spontaneous rupture models of earthquakes on the Jiaocheng fault (JF) near Taiyuan, the capital and largest city of Shanxi Province in north China. We then model the wave propagation and strong ground motion generated by these scenario earthquakes. A map of the seismic‐hazard distribution for a potential M 7.5 earthquake is created based on dynamic rupture and true 3D modeling. The tectonic initial stress fields derived from the inversion of focal mechanisms of historical earthquakes, a nonplanar fault, and a rough surface are considered in the dynamic rupture simulation. Based on the geological structure of the Taiyuan basin, normal faulting with a dipping angle of 60° is implemented for the scenario earthquake simulations. The largest uncertainty of a potential earthquake in the JF zone is the hypocenter. Four cases are used to nucleate the earthquake at different locations. Using these dynamic rupture sources for the JF, we further simulate and analyze both the seismic wave generated by the scenario earthquake and the strong ground motion. It is found that the low‐velocity media of the Taiyuan basin redistribute the ground motion well. The effects of the regional stress fields on the dynamic rupture and hazard distribution are investigated and discussed further. Moreover, a scenario earthquake, which can cause great damage to the city of Taiyuan, is modeled and analyzed.