Lipped channel beams are commonly used in buildings for load-bearing components such as floor joists and roof purlins. The typical practice is to use one-sided web side plates (WSPs) to attach beams from their webs to the supports at the connections, through bolts. In such realistic conditions, it is not practical to use WSPs over the full height of the webs, thus only a part of the web height is restrained at the supports. This controls the mobilising of diagonal tension field in the web and also provides less restraint to the lateral movement of the web. Therefore, realistic support conditions affect the shear capacity due to the lack of restraint of the web at the supports. On the other hand, the current shear design rules are based on ideal support conditions which do not represent the true scenario. Therefore, it is critical to investigate the effect of reduced support restraints on the shear capacity since it has been given less attention in the literature. This paper presents the effect of reduced support restraints on the shear capacity of stainless steel lipped channel beams. Finite element models were developed to study the effect with regard to various influential parameters. From the finite element results, it was found that the shorter the WSP—the higher the shear capacity reduction, where about 50% shear capacity reduction was observed for 60% reduction in WSP height. Furthermore, it was concluded that compact sections exhibit more significant capacity reduction than slender sections when reducing the WSP height. Therefore, a reduction factor was introduced to the current direct strength method shear design rules considering the effect of reduced support restraints on the shear capacity.