This study investigates the arch mechanism of anti-collapse in steel modular buildings with flat steel load-bearing walls when two adjacent modules are lost. It considers the impact of module length, module height, wall thickness, module beam dimension, and wall opening on the collapse performance of steel modular buildings. A practical design-based model is developed to predict the collapse resistance of steel modular buildings due to arch mechanism, taking into account various structural parameters. Findings indicate that an increase in module height enhances the anti-collapse resistance of steel modular buildings and reduces the displacement at the end of the arch mechanism. Conversely, an increase in module length decreases the anti-collapse resistance while increasing the displacement at the end of the arch mechanism. Both the anti-collapse resistance and displacement are improved with increases in wall panel thickness or beam section dimension. However, increases in wall opening height and length reduce both collapse resistance and displacement, with wall opening height having a more pronounced effect on collapse resistance than opening length. The regression results indicate that the ratio of the resistance of steel modular buildings due to arch mechanism to the yield resistance can be expressed by a combined power function of the wall height-to-thickness ratio, wall length-to-thickness ratio, and beam span-to-depth ratio. The detrimental effect due to wall opening to the resistance of steel modular buildings at arch mechanism stage can be quantified also by power functions of opening location and opening size.