Reinforced Autoclaved Aerated Concrete (AAC) wall panels are more commonly used to construct load-bearing walls in low-rise prefabricated buildings located in seismic zones. In the scope of this study, the seismic response of buildings constructed with reinforced AAC wall panels was investigated. To this end, an in situ test was conducted on a two-story test building under reversed cyclic displacement excursions. It was determined that the test building could carry a lateral load of 60% more than its weight and has a global displacement ductility of about 3.5. The first story of the building was observed to be critical and the failure of the building was due to overturning response of the whole system. In addition, the proposed numerical models for simulating the behavior of the AAC wall panels were validated. These calibrated numerical models were utilized to conduct nonlinear static analysis of the test building and a reasonably good agreement was observed between the test results and simulations. The results of the incremental dynamic analyses demonstrated that i) the two-story test building could resist strong ground motions with PGA values up to 0.6g without undergoing significant plastic deformations and ii) a reserve of ductility and over strength is available for the AAC panel building to survive earthquakes with PGAs reaching nearly 0.6g. Based on these numerical results, reinforced AAC wall panel buildings appear to be good alternatives for low-rise construction in seismic regions.