A hybrid structure constructed by replacing external steel beams and columns in the steel frame (SF) to precast concrete shear walls with insulation (PCSWs) and precast concrete cladding panels (PCCPs, SFPCSW) is proposed in this paper to avoid the problem of columns protruding from walls and PCCPs directly connected with SF. Numerical models of the SF and SFPCSW structures are established in ETABS software based on an 18‐story assembled steel residential building to investigate the seismic performance and collapse resistance capacity of SFPCSW. Time history analysis results show that the SFPCSW exhibits bending‐shearing lateral deformation and has more uniform interstory drift ratios than the SF. Under major earthquakes (i.e., probability of exceedance of 2% in 50 years), the damage of SF is concentrated in stories 1–6; for SFPCSW, the plastic hinges mainly appear in the concrete beams between PCSWs at each story, and the damage in PCSWs and the internal frame is small. Using pinned connections between the steel beam and PCSW reduces the structural lateral stiffness and increases the earthquake load carried by the internal frame. The incremental dynamic analysis results show that the SF and SFPCSW have similar collapse resistance capacities.