Strengthening of masonry against seismic events is very essential and getting maximum attention of researchers around the globe. An extensive experimental program was carried out to study the in-plane lateral performance of un-reinforced masonry, strengthened and retrofitted masonry wall panels under lateral cyclic loading. Twenty tests were carried out; four tests under monotonic lateral loading, twelve tests under static cyclic loading and four tests under pure compression. The test results were analyzed in five groups and this paper presents the analysis of group 4, which deals with effect of axial pre-compression on masonry seismic performance. Three single leaf panels with aspect ratio of 0.67 having size 1.65x1.1m were constructed using same material and workmanship. All the three un-reinforced walls were tested under 0, 0.5 and 1.0MPa vertical pre-compression and displacement controlled static cyclic loading. The wall tested under 0.5MPa pre-compression was reference specimen. The key parameters studied were hysterics behavior, peak lateral load, ultimate lateral displacement, energy dissipation, ductility, response factor and damping ratio. It was observed that level of axial pre-compression has significant effect on lateral capacity, failure mode and performance of masonry. In case of zero pre-compression the lateral capacity was very less and wall went into rocking failure at early stages of loading. Increase in pre-compression to 1.0MPa enhanced the lateral capacity by a factor of 1.92 times. After analysis of test results, it is found that pre-compression has significant effect on lateral capacity, failure mode and performance of masonry. In case of zero pre-compression the lateral capacity was very less and wall went into rocking failure at early stages of loading. Increase in pre-compression to 1.0MPa enhanced the lateral capacity by a factor of 1.92 times. After analysis of test results, it is found that pre-compression has very significant effect on lateral strength, energy dissipation and overall seismic performance.