Prior to the 1994 Northridge earthquake, structural engineers in the United States believed that welded steel moment-resisting frame building would provide outstanding performance in earthquakes, exhibiting ductile behavior and resisting very strong ground motions without substantial degradation of its structural capacity. However, the discovery of brittle fracture damage in many steel moment frame buildings after the earthquake revealed substantial misunderstanding the ways engineers previously designed and constructed such steel structures. The common damages came from fractures in the beam-to-column moment connection region. The research presented herein focused on investigating the inelastic performance of unreinforced welded steel moment connection and to identify some potential problems of such a connection by using finite element analysis. First, the finite element model of a typical exterior beam-to-column moment connection subjected to cyclic loading was developed. Then, its analytical results were verified with an available experiment data. Final, guided by the first part, the analytical investigation of panel zone was conducted. The analytical results show that the state of stresses around the connection area is, in fact, very complex. The current design practice following the classical beam theory is inadequate to meet the required strength of the connections. The beam flanges have to carry a considerable shear force instead of the shear tab. This shear force can cause premature fracture of the beam flanges before they can participate in the inelastic response. The panel zone study shows that the panel zones demonstrate considerable reserve strength beyond the elastic range without strength degradation of connections. However, an appropriate limit should be assigned in order to get a balanced inelastic response between the panel zone and beam