Buckling of thin steel shear panels is a sudden phenomenon, whereas material yielding is a gradual trend. After buckling, large out-of-plane displacements are formed which induce relatively high bending stresses with significant influences on the postbuckling behaviour of shear panels. At present, design rules are only concerned with critical and ultimate load capacity limit states. This paper discusses the nonlinear postbuckling path of thin shear panels, emphasizing on (i) an intermediate limit state when panels experience first yield points and (ii) the growth pattern of yield zone, It is also observed that the postbuckling behaviour of shear panels is mostly governed with geometrical nonlinearity. (C) 2008 Elsevier Ltd. All rights reserved.