One of the most promising ways through which a steel moment frame may attain high energy dissipating capability is to trim off a portion of the beam flanges near the column face. This type of moment connection, known as Reduced Beam Section (RBS) connection, has notable superiority in comparison with other moment connection types. As the result of the advantages of RBS moment connection, it has widely being used in practice. In spite of the good hysteretic behaviour, an RBS beam suffers from an undesirable drawback, which is local and lateral instability of the beam. The instability in the RBS beam reduces beam load-carrying capacity. This paper aims to investigate key issues influencing cyclic behaviour of RBS beams. To this end, a numerical analysis was conducted on a series of steel subassemblies with various geometric properties. The obtained results together with the existing experimental data are used to study the instability of RBS beams. A new slenderness concept is presented to control an RBS beam for combined local and lateral instability. This concept is in good agreement with the numerical and experimental results. Finally, a model is developed for the prediction of the magnitude of moment degradation owing to the instability of an RBS beam.