The buckling failure of thin-walled circular shells under local axial compression is common in engineering. This study uses the vector form intrinsic finite element (VFIFE) method to investigate the buckling behavior of thin-walled circular shells under local axial compression by introducing a multilinear hardening model, taking into account geometric and material nonlinearity. A buckling analysis program based on the VFIFE method was developed and verified by comparison with experimental results. The buckling mode and postbuckling behavior of thin-walled circular shells were studied by using the verified program. The results show that the VFIFE method with a multilinear hardening model can accurately calculate the buckling load of local axially compressed thin-walled circular shells, and effectively simulate the buckling development process, which offers great advantages in predicting the postbuckling of structures.