This study proposes an iterative direct displacement based design method for a novel steel-timber hybrid structure. The hybrid structure incorporates cross-laminated timber (CLT) shear panels as an infill in steel moment-resisting frames. The proposed design method is applied to design three-, six-, and nine-story hybrid buildings, each with three bays and a CLT-infilled middle bay. Nonlinear time history analysis, using 20 earthquake ground motion records, is carried out to validate the performance of the design method. The results indicate that the proposed method effectively controls the displacements due to seismic excitation of the hybrid structure.