Floor diaphragms are structural elements mainly responsible for transmitting lateral loads to the adjoining vertical members of the Seismic-Force-Resisting System (SFRS). Under significant seismic events, the actual in-plane stiffness of floor diaphragms affects patterns of load distribution in-between horizontal and vertical elements and, as such, contributes to the local nonlinear response and the global dynamic behavior. However, in SFRS with mass timber and hybrid timber-based floor diaphragms, neither design provisions nor procedures exist to account for its in-plane flexibility. To highlight the influence of the actual in-plane stiffness of diaphragms on a timber-steel hybrid building system, this paper analyzes its dynamic response via nonlinear dynamic analysis. The OpenSees framework is adopted to develop three finite-element building models that feature diaphragms with (i) rigid behavior, (ii) actual members and connections diaphragm subassembly behavior, including panel-to-panel slab connections, or (iii) neglecting the contribution of the slab connections, respectively. The SFRS of the building entails a Special Concentrically Braced Frame whose nonlinear behaviors are explicitly simulated, including global buckling, tensile yielding, and post-buckling behaviors. The collapse fragility analysis reveals that the conditional probability of exceeding all three considered limit states given any level of ground motion intensity for the SFRS equipped with the CLT-steel floor diaphragm is close to that of the SFRS with rigid diaphragm behavior. Removal of CLT panel-to-panel connections attracts disproportionate and excessive lateral deformation demands towards the unbraced frames due to the increased in-plane diaphragm flexibility.