This paper presents a preliminary study on the influence of material ductility on diagonal tension behavior of shear-wall panels. There have been a number of previous studies, which suggest that the use of high ductile material such as ECC (Engineered Cementitious Composite) significantly enhanced shear capacity of structural elements even without shear reinforcements involved. The present study emphasizes increased shear capacity of shear-wall panels by employing a unique strain-hardening ECC reinforced with poly(vinyl alcohol) (PVA) short random fibers. Normal concrete was adopted as the reference material. Experimental investigation was performed to assess the failure mode of shear-wall panels subjected to knife-edge loading. The results from experiments show that ECC panels exhibit a more ductile failure mode and higher shear capacity when compared to ordinary concrete panels. The superior ductility of ECC was clearly reflected by micro-crack development, suppressing the localized drastic fracture typically observed in concrete specimen. This enhanced structural performance indicates that the application of ECC for a in-filled frame panel can be effective in enhancing seismic resistance of an existing frame in service.