This paper describes, firstly, an analytical method of computing the eigenvalues of vertical vibration of ships taking into account the distribution of mass, the effect of variable section and the effect of shear deflection and rotary inertia. The fundamental equation is solved by Galerkin's method in the form of numerical integration. For 2 node vertical vibration, the virtual added mass is calculated by Lewis' or Taylor's method and by using it the computed natural frequencies are usually in good agreement with the, observed frequencies. For more than 3 node vertical vibration, however, the virtual added mass calculated by Lewis' or Taylor's method results in considerable discrepancy between the computed and observed frequencies. To explain this discrepancy the author examins the effect of local vibration of ship's bottom on the virtual added mass and obtains a reasonable correction factor for the virtual added mass. Applying the above described method, an analysis of the vertical vibration of two actual cargo ships is shown, and the computed natural frequencies are in good agreement with the observed frequencies for 2 and 3 node vertical vibration.