Most of the railway tunnels in Sweden are shallow-seated (<20 m of rock cover) and are located in hard brittle rock masses. The majority of these tunnels are excavated by drilling and blasting, which, consequently, result in the development of a blast-induced damaged zone around the tunnel boundary. Theoretically, the presence of this zone, with its reduced strength and stiffness, will affect the overall performance of the tunnel, as well as its construction and maintenance. The Swedish Railroad Administration, therefore, uses a set of guidelines based on peak particle velocity models and perimeter blasting to regulate the extent of damage due to blasting. However, the real effects of the damage caused by blasting around a shallow tunnel and their criticality to the overall performance of the tunnel are yet to be quantified and, therefore, remain the subject of research and investigation. This paper presents a numerical parametric study of blast-induced damage in rock. By varying the strength and stiffness of the blast-induced damaged zone and other relevant parameters, the near-field rock mass response was evaluated in terms of the effects on induced boundary stresses and ground deformation. The continuum method of numerical analysis was used. The input parameters, particularly those relating to strength and stiffness, were estimated using a systematic approach related to the fact that, at shallow depths, the stress and geologic conditions may be highly anisotropic. Due to the lack of data on the post-failure characteristics of the rock mass, the traditional Mohr-Coulomb yield criterion was assumed and used. The results clearly indicate that, as expected, the presence of the blast-induced damage zone does affect the behaviour of the boundary stresses and ground deformation. Potential failure types occurring around the tunnel boundary and their mechanisms have also been identified.