A model of full scale one-bay, one storey was tested under low cyclic loading in order to study the hysteretic behavior of steel frames with sandwich composite (SC) panels. According to the failure pattern and damage process of test specimen, seismic behaviors were evaluated. Hysterics loops, skeleton curves, curves of strength degradation, and curves of stiffness degradation, ductility index and viscous damping coefficient were analyzed. Test results show that the failures of panels mainly occurred around the embedded parts, but compared with traditional panels and walls, SC panels exhibit a better integration. The connection between panel and steel frame is vital to the mutual work of the two parts. Finally, seismic design recommendations based on the analysis of ductility index and energy dissipation of the structures are presented.