<p>The evaluation of the in-plane displacement capacity of URM walls at different performance levels is of primary importance for the seismic design and assessment of masonry buildings since drift limits represent one of the main parameters for the control of the damage at serviceability and ultimate conditions and affect the non-linear models used in the structural analyses and the evaluation of other significant seismic parameters, such as the <i>q</i>-factors for linear elastic analyses. The values of drift limits of masonry walls are still under discussion and updated as more experimental data become available and the performance objectives in design codes are updated. In order to contribute to this task, a new definition of specific performance levels for URM walls is provided in this work. Four limit states are introduced based on the increasing extent of damage due to in-plane actions derived from the results of some significant examples of in-plane tests, and are associated to different points on the experimental envelope curves. Then, the evaluation of the deformation capacity at the different limit states is carried out on in-plane cyclic tests on URM walls taken from an existing dataset. The results are provided both in aggregate form and as a function of different masonry typologies and main failure mechanisms. Statistical evaluation of the drift capacity and safety factors developed using a consistent approach have been derived to determine design values. The effects of these outcomes on the seismic design and assessment of masonry buildings are underlined, in relation with the drift limits to adopt in codified procedures.</p>