This work presents a novel computational strategy based on gradient enhanced damage and cyclic yielding with nonlinear mixed hardening behaviour for simulating low-cycle fatigue of ductile materials. A new yield function is introduced which accommodates the cyclically evolving state variables during mixed hardening and the damage induced during the application of repetitive loads. The resulting constitutive relations are derived in an incremental form. The non-local strains facilitate the computation of incremental damage in the material. A finite element scheme is developed from the governing physics through full coupling between damage and cyclic-elastoplastic deformations. In order to obtain an accurate computational response, a stress-return mapping scheme is formulated for the damage-dependent yield function. The developed numerical strategy is investigated for specimens made of various ductile materials exhibiting elasto-plastic behaviour under low-cycle fatigue loads. The stress-strain hysteresis and cyclic softening computed by the present numerical framework agree well with experimental data available in literature. The low-cycle fatigue crack-growth results are also accurately captured for various fatigue loading conditions.