This paper presents a meshless local boundary integral equation method (LBIEM) for dynamic analysis of an anti-plane crack in functionally graded materials (FGMs). Local boundary integral equations (LBIEs) are formulated in the Laplace-transform domain. The static fundamental solution for homogeneous elastic solids is used to derive the local boundary–domain integral equations, which are applied to small sub-domains covering the analyzed domain. For the sub-domains a circular shape is chosen, and their centers, the nodal points, correspond to the collocation points. The local boundary–domain integral equations are solved numerically in the Laplace-transform domain by a meshless method based on the moving least–squares (MLS) scheme. Time-domain solutions are obtained by using the Stehfest's inversion algorithm. Numerical examples are given to show the accuracy of the proposed meshless LBIEM.