In the past, the domain decomposition method was developed successfully for solving large-scale linear systems. However, the problems with significant nonlocal effect remain a major challenger for applying the method efficiently. In order to sort out the problem, a non-overlapping domain decomposition method with nonlocal interface boundary conditions was recently proposed and studied both theoretically and numerically. This paper is the report on the further development of the method, aiming to provide a comprehensive convergence analysis of the method, with supplementary numerical tests to support the theoretical result. The nonlocal effect of the problem is found to be reflected in both the governing equation and boundary conditions, and the effect of the latter was never taken into account, although playing a significant role in affecting the convergence. In addition, the paper extends the applicability of the analysis result drawn from the Poisson’s equation to more complicated problems by examining the symbols of the Steklov–Poincaré operators. The extended application includes a model equation arising from fluid dynamics and the high performance of the domain decomposition method in solving this equation is better elaborated.