Prefabricated modular steel (PFMS) construction is an industrial technique of construction that enhances productivity, site safety, and construction quality. The assembling of prefabricated buildings needs an accurate connecting system to ensure structural integrity and effective transfer of loads and moments. Therefore, in the current study, a new-type bolted joints having a long tenon-gusset plate for horizontally, and long beam bolts for vertically connecting modular units have been developed. Nonlinear static analysis was carried out by the finite element (FE) analysis software ABAQUS. The bending performance of the joints with varying parameters and modular units with different forces scenario, was studied. To analyse the seismic performance of modular steel building (MSB), a simplification of the detailed joint with the connector was performed. Then the seismic response of full-scale four-storey simplified MSB was studied by dynamic analysis. The results revealed that joints possessed stable load-carrying capacity with adequate ductility and seismic performance. The simultaneous application of axial, lateral tension, and compression forces affected ultimate capacity, initial stiffness, and ductility of single modules more than the double modules. Moreover, the simplified model accurately mimicked the bending behaviour of joints with a fluctuation of < 4% in capacities. Inter-storey drift ratios (IDR) of both the shorter and longer directions of MSB were found lower than the code limits of 2.5%. Hence, the static analysis on joints and modular units, and dynamic analysis on MSB authenticated the effectiveness of developed joints to resist and distribute the lateral loads. Finally, the accuracy of FE analysis was verified by analysing twelve bending tests on joints listed in the references.