The objective of this investigation is to develop design rules for gypsum-sheathed cold-formed steel (CFS) members subjected to bending (out-of-plane). The parameters studied include the slenderness of the CFS stud and different sheathing configurations (sheathing thickness and fastener spacing). A comprehensive analytical study on the stiffnesses offered by the sheathing to the CFS panel was conducted for use in design equations. Three different combinations of stiffnesses offered by the sheathing were examined based on the failure modes and ultimate moment capacities obtained from the experimental results. The experimental results were compared with the predicted design strengths using the current design approach available from the American Iron and Steel Institute (AISI). The deficiency of the current design approach is highlighted, and a modified approach for incorporating the stiffnesses offered by the sheathing in the elastic buckling analysis is presented. The design strengths predicted using the modified approach on stiffness selection showed good agreement with the ultimate moments obtained from the experiments. A performed reliability analysis indicated that the modified design approach presented in this work can be used for the design of gypsum-sheathed cold-formed steel members subjected to bending (out-of-plane). A detailed design example for the sheathed CFS panel based on each design approach used in this work has been presented in the form of a table for more clarity. © 2018 American Society of Civil Engineers.