Masonry buildings are primarily constructed out of bricks and mortar which become discrete pieces and cannot sustain horizontal forces created by a strong earthquake. The collapse of masonry walls may cause significant human casualties and economic losses. To maintain their integrity, several methods have been developed to retrofit existing masonry buildings, such as the constructional RC frame which has been extensively used in China. In this study, a new method using precast steel reinforced concrete (PSRC) panels is developed. To demonstrate its effectiveness, numerical studies are conducted to investigate and compare the collapse behavior of a structure without retrofitting, retrofitted with a constructional RC frame, and retrofitted with external PSRC walls (PSRCW). Sophisticated finite element models (FEM) were developed and nonlinear time history analyses were carried out. The results show that the existing masonry building is severely damaged under occasional earthquakes, and totally collapsed under rare earthquakes. Both retrofitting techniques improve the seismic performance of existing masonry buildings. However, it is found that several occasional earthquakes caused collapse or partial collapse of the building retrofitted with the constructional RC frame, while the one retrofitted by the proposed PSRC wall system survives even under rare earthquakes. The effectiveness of the proposed retrofitting method on existing masonry buildings is thus fully demonstrated.