Summary A ductile Vierendeel frame can be constructed by incorporating steel panel dampers (SPDs) into a moment‐resisting frame (MRF). Thus, the stiffness, strength, and ductility of the lateral force–resisting system can be enhanced. The proposed 3‐segment SPD possesses a center inelastic core (IC) and top and bottom elastic joints. This paper discusses the mechanical properties, capacity design method, and buckling‐delaying stiffeners for the SPDs through the use of cyclic loading tests on 2 specimens. Tests confirm that SPDs' cyclic force vs deformation relationships can be accurately predicted using either the Abaqus or PISA3D model analyses. The paper also presents the capacity design method for boundary beams connected to the SPDs of a typical SPD‐MRF. The seismic performance of an example 6‐story SPD‐MRF is evaluated using nonlinear response history analysis procedures and 240 ground accelerations at 3 hazard levels. Results indicate that under 80 maximum considered earthquake ground accelerations, the mean‐plus‐one standard deviation of the shear deformation of the ICs in the SPDs is 0.055 rad, substantially less than the 0.11 rad deformational capacity observed from the SPD specimens. The experimental cumulative plastic deformation of the proposed SPD is 242 times the yield deformation and is capable of sustaining a maximum considered earthquake at least 8 times before failure. This paper introduces the method of using one equivalent beam‐column element for effective modeling of the 3‐segment SPD. The effects of the IC's relative height and stiffness on the overall SPD's elastic and postelastic stiffness, elastic deformation limits, and inelastic deformational demands are discussed.