In order to provide an improved understanding of the behavior of squat reinforced concrete shear walls and promote the application of recycled concrete in structures, six rectangular squat recycled concrete wall specimens were tested under in-plane cyclic loading. The specimens were designed based on Chinese code for design of concrete structures GB 50010-2010, which specified minimum horizontal and vertical reinforcement ratios of 0.25% in web, and vertical reinforcement ratio of 1.0% in boundary element. The main parameters investigated are axial load level and the amount of vertical and horizontal web reinforcement. This research presents the experimental results which include test observation, lateral load versus drift response, and measured strain distribution of vertical and horizontal reinforcement, measured strength and drift capacity of wall specimens. It was found that increasing of axial load level resulted in a higher peak load but less ultimate drift capacity, and increasing of horizontal web reinforcement had small effect on peak load but could improve the drift capacity. In this study, a mixed flexure and diagonal compression mechanism was proposed to reflect the lateral load resisting behavior of squat walls. Particularly, a simplified analytical method was developed to predict the peak loads of squat walls failed in flexure or a mixed flexural–diagonal compression mode, which was proved to accurately predict the peak loads of specimens.