The current research presents a novel and sustainable load-bearing system utilizing cellular lightweight concrete block masonry walls. These blocks, known for their eco-friendly properties and increasing popularity in the construction industry, have been studied extensively for their physical and mechanical characteristics. However, this study aims to expand upon previous research by examining the seismic performance of these walls in a seismically active region, where cellular lightweight concrete block usage is emerging. The study includes the construction and testing of multiple masonry prisms, wallets, and full-scale walls using a quasi-static reverse cyclic loading protocol. The behavior of the walls is analyzed and compared in terms of various parameters such as force–deformation curve, energy dissipation, stiffness degradation, deformation ductility factor, response modification factor, and seismic performance levels, as well as rocking, in-plane sliding, and out-of-plane movement. The results indicate that the use of confining elements significantly improves the lateral load capacity, elastic stiffness, and displacement ductility factor of the confined masonry wall in comparison to an unreinforced masonry wall by 102%, 66.67%, and 5.3%, respectively. Overall, the study concludes that the inclusion of confining elements enhances the seismic performance of the confined masonry wall under lateral loading.