We present a study of the seismic radiation of a physically realistic source model—the circular crack model of Madariaga—at close distance range and for vertically heterogeneous crustal structures. We use this model to represent the source of small strike-slip earthquakes. We show that the characteristics of the radiated seismic spectra, like the corner frequency, are strongly affected by the presence of the free surface and by crustal layering, and that they can be considerably different from the ones of the homogeneous-medium far-field solution. The vertical and radial displacement spectra are the most strongly affected. We use this source model to calculate the decay of peak ground velocity with epicentral distance and source depth for small strike-slip earthquakes in California. For distances between 10 and 80 km, the peak horizontal velocity decay is of the form r−1.25 for a 4-km hypocentral depth and r−1.65 for deeper sources. The predominance of supercritically reflected arrivals beyond epicentral distances of 70 to 80 km produces a sharp change in the rate of decay of the ground motion. For most of the cases considered, the peak ground velocity increases between 80 and 100 km. We also show that the S-wave velocity in the source layer is the lower limit of phase velocities associated with significant ground motion.