Although energy dissipation is one of the key factors in resisting seismic force, current design codes only take into account the ductility of the backbone properties of hysteresis curves, and the energy dissipation is usually not accounted for. This paper focuses on understanding and assessing the influence of energy dissipation due to different pinching levels on the seismic performance of a light-frame wood shear wall system. Timber structures with identical backbone curves but different pinching levels were analyzed. Incremental dynamic analyses were run on a single-degreeof-freedom system with varying pinching stiffness and residual strength. The seismic evaluation is presented by the spectral accelerations causing failure of the structure and the hysteresis energy dissipation under a suite of 22 ground motions (2 components per motion) over a wide range of fundamental periods of typical timber structures. Results show that the effect of pinching on the seismic performance of timber structures is period-dependent. Short period structures are more sensitive to the pinching of hysteresis loops compared to long period structures. The residual strength of pinching loops has a greater influence on the seismic performance than the stiffness of the pinching loops. Hysteretic energy dissipation derived from standard reversed-cyclic tests can provide a better understanding on the seismic resistance of timber structures. However, the hysteretic energy under a seismic event at near-collapse stage neither agrees with quasistatic cyclic test’s energy dissipation nor is well correlated to the maximum seismic capacity of the structure.