Typically, beams that form part of structural systems are subjected to vertical distributed loading along their length. Distributed loading affects moment and shear distribution, and consequently spread of inelasticity, along the beam length. However, the finite element models developed so far for seismic analysis of frame structures either ignore the effect of vertical distributed loading on spread of inelasticity or consider it in an approximate manner. In this paper, a beam-type finite element is developed, which is capable of considering accurately the effect of uniform distributed loading on spreading of inelastic deformations along the beam length. The proposed model consists of two gradual spread inelasticity sub-elements accounting explicitly for inelastic flexural and shear response. Following this approach, the effect of distributed loading on spreading of inelastic flexural and shear deformations is properly taken into account. The finite element is implemented in the seismic analysis of plane frame structures with beam members controlled either by flexure or shear. It is shown that to obtain accurate results the influence of distributed beam loading on spreading of inelastic deformations should be taken into account in the inelastic seismic analysis of frame structures.