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Abstract In this study, impacts of residual stress and shear deformation are investigated on 2D steel frames using a new fiber plastic hinge method. Geometry and material nonlinearities, residual stress, shear deformation, imperfections are considered simultaneously in the nonlinear analysis. The proposed method is efficient in computational efforts since the one-element modeling is used for the nonlinear analysis by employing stability functions for capturing the P-small delta phenomenon. The P-large delta phenomenon is considered using the geometric stiffness matrix. Plastic hinges are assumed to be formed at two ends of members. Cross-sections at two ends of members are divided into many fibers. The ECCS residual stress pattern is assigned directly through fibers as initial stress conditions. A finite element program is coded using the Fortran programming language for predicting the nonlinear behavior and ultimate strength of planar steel frames. The behavior and load-carrying capacity of steel frames are predicted precisely and efficiently using the nonlinear inelastic analysis. A case study of a large-scale planar steel frame is investigated for the frame's behavior and strength under the effects of residual stresses and shear deformation. Through numerical examples, we recommend that both residual stress and shear deformation should be considered in the advanced direct analysis and design procedures for steel-framed structures. Article highlights A nonlinear 2D beam column element is developed successfully using only one element per member for modeling. Geometric nonlinearities, material plasticity, residual stress, and shear deformation are investigated simultaneously. Both residual stress and shear deformation should be considered in the engineering design of steel frames.