Modern earthquake-resistant design aims to isolate architectural precast concrete panels from the structural system so as to reduce the interaction with the supporting structure and hence minimize damage. The present study seeks to maximize the cladding-structure interaction by developing an energy-dissipating cladding system (EDCS) that is capable of functioning both as a structural brace, as well as a source of energy dissipation. The EDCS is designed to provide added stiffness and damping to buildings with steel moment resisting frames with the goal of favorably modifying the building response to earthquake-induced forces without demanding any inelastic action and ductility from the basic lateral force resisting system. Because many modern building facades typically have continuous and large openings on top of the precast cladding panels at each floor level for window system, the present study focuses on spandrel type precast concrete cladding panel. The preliminary design of the EDCS was based on existing guidelines and research data on architectural precast concrete cladding and supplemental energy dissipation devices. For the component-level study, the preliminary design was validated and further refined based on the results of nonlinear finite element analyses. The stiffness and strength characteristics of the EDCS were established from a series of nonlinear finite element analyses and are discussed in detail in this paper.