We proposes an efficient algorithm for extracting SPICE-compatible circuits of embedded interconnect structures from FDTD-simulated time-domain reflections. A layer-peeling technique (LPT) is used to obtain the time-domain step response of the interconnects under extract (IUE) itself. A pencil matrix method is then used to get the pole-residue representation of the time-domain step response of the IUE. A pole-reducing procedure is implemented based on a bandwidth criterion to simplify pole-residue representation. Finally, the lumped equivalent models of the IUE are synthesized by an equivalent lumped-model extraction technique, in which four types of equivalent model bases are used. The equivalent circuit can be easily implemented in SPICE-like simulator. Several transmission line structures are presented as examples to demonstrate the validity of the proposed algorithm both in time and frequency domains.