If utilized, the energy dissipative capability of seismically loaded shallow foundations due to inelastic behavior can result in more economic design, provided the consequences, such as excessive deformations are accounted for. In this article, a Beam-on-Nonlinear-Winkler-Foundation (BNWF) model is used to assess the performance of shearwall-foundation systems with different attributes, when subjected to ground motions of varied hazard levels. The numerical study indicates that the force and drift demands to the shearwall reduce significantly, when nonlinear foundation behavior is realized, while permanent settlement is well below the permissible limit. These results support the concept of shallow foundation capacity mobilization in future design. Copyright © 2010 John Wiley & Sons, Ltd.