Cyclic tests of five UHPC squat shear walls and one high-strength concrete counterpart were carried out in this study to investigate the seismic performance of UHPC shear walls with high design axial load ratio ranging from 0.5 to 0.6, and web distributed reinforcement ratio varying from 0.19% to 0.56%. The failure mode, crack pattern, force–displacement relationship, deformation mechanism, energy dissipation, the strength and stiffness degradation are comprehensively investigated. In addition, the stress development and shear contribution of horizontal rebar in the web is calculated and analyzed. Finally, design suggestions for UHPC squat shear walls are proposed in terms of minimum horizontal reinforcement ratio and axial load ratio. It is demonstrated by the test results that UHPC specimens showed an excellent crack control ability with narrow shear-related cracks distributed in a dense array. The shear capacity and ultimate deformation of UHPC specimen were significantly improved by almost 85% and 95% in comparison with high-strength concrete specimen. Noticeably, the UHPC specimen with the minimum amount of transverse rebars reached the highest ultimate drift ratio of 1.75%. The stress level of horizontal rebars in UHPC specimens can be reduced by at least 72%. The test results show the potential to reduce the horizontal reinforcement ratio to 0.19% for the UHPC squat shear walls under the high design axial load ratio of 0.5. A modified strut-and-tie model for predicting the shear strength of UHPC shear walls is proposed with an error of no more than 4%.