This paper presents the seismic design of a steel moment‐resisting knee‐braced frame (MKF) using the theory of plastic mechanism control (TPMC) within the capacity‐based design framework. The MKF is an alternative system to MRFs, wherein knee elements are utilized to provide rigid connections and enhance lateral stiffness. Capacity‐based design, the predominant approach in current seismic provisions, relies on two key principles: (1) selecting specific structural components as fuses with sufficient ductility to dissipate seismic energy, and (2) ensuring non‐fuse elements can resist the maximum probable reactions from these fuses. The ultimate goal is to achieve a global mechanism where yielding occurs in all structural fuses and at the base of first‐story columns. However, existing seismic design provisions often struggle to fully satisfy the second principle due to the lack of a method for controlling failure modes. TPMC addresses this challenge by ensuring compliance with the second principle, grounding its approach in the kinematic method and the mechanism equilibrium curve within the rigid‐plastic analysis framework. By considering all potential story‐based undesirable mechanisms and calculating the required plastic moment of columns up to a target design displacement, TPMC ensures adherence to the second principle of the capacity‐based design approach, leading to the achievement of a global collapse mechanism. In this paper, an iterative method is proposed for designing beams and knee elements by considering plastic hinges at both ends of the beams, followed by a TPMC‐based methodology for designing columns to ensure a global mechanism. A parametric analysis of a single‐story single‐span MKF explores the effects of knee element geometry ( and ) on component demands. The results indicate that optimal parameter ranges of and can minimize the demands for MKF components. Practical design examples are illustrated using three steel MKFs, each consisting of four, seven, and ten stories with five spans. Pushover analysis and nonlinear dynamic analyses were performed to demonstrate the effectiveness of the proposed design procedure in ensuring the attainment of a global mechanism and excellent seismic performance under real ground motions.