Factors affecting the cyclic response of seabed around offshore foundations are associated with soil structure, wave loading and drainage conditions. Constitutive theories proposed to account for these factors in the design of such soil-structure systems must be able to capture the essentials of seabed dynamics. In this paper, a combined theoretical-numerical study on dynamic response of sandy seabed focusing on nonlinear soil constitutive behavior is presented. The manuscript is of threefold. First part presents a rigorous theoretical study to evaluate the cyclic behavior of seabed using the framework of bounding surface plasticity. Focus here is on more effectively modeling the elemental response, particularly liquefaction. A new hardening law is proposed to incorporate into the modified bounding surface model which is found to be the effective formulation addressing the wave-induced nonlinear seabed behavior. Second part presents a number of cyclic triaxial tests simulated to verify the new constitutive formulation. In the third part, a poro-elasto-plastic numerical model in terms of the extended nonlinear finite element form of the discretized coupled flow-deformation equations is developed. Then, free-field wave-induced dynamic response of sandy seabed is evaluated on various problems presenting the capability of the proposed constitutive formulation in capturing residual liquefaction.