With the rapidly increasing rate of urbanization worldwide especially in high seismic regions, researchers and engineers are seeking cost-effective building systems that are sustainable and can achieve superior seismic performances. Cross Laminated Timber (CLT) is an engineered wood based material which is known as a suitable wood product for tall building construction because of its robustness and enhanced fire performance. However, the traditional CLT platform shear wall lateral system is susceptible to damage at their connections during strong earthquakes, one of the potentially viable solutions to avoid connection damage in strong earthquakes is to implement inter-story isolation system in multi-story CLT buildings. Application of such a system leads to elongated building natural period, shifted lateral displacement demands, and increased amount of damping. This concept has been used in both steel and concrete structures but not yet in any wood buildings. Traditional light-framed wood building has a height limit of 4~5 stories which inter-story isolation is not beneficial or necessary. Only until recently, CLT material enables the construction of tall wood buildings that can fully utilize the benefit of inter-story isolation. The objective of this study is to apply performance-based seismic design methodology for inter-story isolated tall CLT buildings to explicitly target desirable wood building drift and isolation deformation levels. Thus, a generalized Direct Displacement Design (DDD) philosophy for inter-story isolated CLT buildings was outlined to provide different levels of performance against moderate to strong earthquakes. The proposed DDD approach was developed and implemented with two examples of different building heights. The examples include a 12-story CLT building representing mid-rise construction, and a 20-story building representing tall wood construction. The resulted design was validated using numerical simulation with an existing software package validated through large scale shake table tests. It is discovered that for the height range currently planned for wood construction, having just one isolation layer can provide reasonable level of damage mitigation. This study also provides insight into the widely used DDD approach on a fundamental level. A specific study on the uncertainty in current DDD procedures applying to linear and nonlinear structural systems was conducted. The research work result was disseminated as peer-reviewed publications that have been published or in the process of preparation.