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The functioning of lifeline systems after a major earthquake is critical to the modern urban center. The system study of lifelines response to catastrophic earthquakes is the essential prerequisite step for the emergency management authority to form a mitigation and reconstruction plan in order to minimize the total loss caused by the earthquake. The study develops an applied formulation of lifeline restoration processes in the post earthquake period by the method of Markov decision process. The objective of the research is to test various reconstruction strategies to determine optimal mitigation policies based upon various reconstruction goals, in particular, to optimize the distribution of limited reconstruction resources. By computer simulation, various scenarios are examined and useful information that is important to the emergency management authority is obtained.