Fibre-reinforced polymer (FRP) reinforcement has been employed as an alternative to conventional steel reinforcement in concrete structures, which is attributed to its excellent strength and corrosion resistance. However, one drawback is that FRP reinforcements are brittle and affect the ductility of concrete structures. One of the recent effective techniques proposed to overcome ductility issues is the compression yielding (CY) concept. The CY mechanism allows the structure to fail differently than the conventional FRP-reinforced concrete structure. Thus, the existing design recommendations as per the current codes for FRP-reinforced concrete structures are not appropriate. Hence, reliability studies are crucial for the development of a functional CY beam design in order to emphasise the structure’s lifetime performance and to guarantee safety requirements. In this study, a reliability-based design approach is developed for a compression-yielded FRP-reinforced concrete beam (CY beam) using load and resistance factor design (LRFD). Firstly, the flexural failure modes of CY beams are discussed. The uncertainties involved in the development of the probabilistic model for the CY beam are defined. A case study is consequently conducted for a CY beam with random variables that are associated with the statistical characteristics of material properties and load. The reliability analysis method employed in this research is the Hasofer–Lind method. The results suggest the importance of choosing appropriate design variables and stochastic parameters for CY blocks that contribute to a higher level of reliability. The reliability index and resistance factors of a CY beam are then evaluated using the Monte Carlo Simulation computational method. The reliability index value of 3.336 is obtained from the simulation, which indicates that the CY beam demonstrates ductile behaviour. The results not only demonstrate ductile behaviour but also contribute to a possible reduction in material costs and a substantial safety margin. When compared to conventional FRP-reinforced concrete beams, for different load ratios, CY beams showed higher resistance and better reliability levels.