Major seismic events can result in large residual displacements in conventional monolithic bridge columns, causing serviceability problems and expensive repair costs. In contrast, post-tensioned segmental columns exhibit low residual drifts. However, such structures have limited energy dissipation capacity and require heavy mechanical equipment for prestressing using conventional tendons. This study proposes a novel segmental column system where prestressing is achieved by iron-based shape memory alloy (Fe-SMA) bars. A 3D finite element (FE) model was developed to evaluate the seismic performance of the proposed column system. The model incorporated the experimentally validated material behavior of activated Fe-SMA bars under tension-compression reversals, which is currently lacking in the state-of-the-art. The validated model was used to conduct a parametric study to investigate the effect of several unexplored parameters on the self-centering and energy dissipation behavior of the Fe-SMA prestressed segmental columns, which could contribute to their optimal design. The parameters included total axial load ratio, amount of prestressing, ratio of energy dissipating (ED) bars to Fe-SMA bars, and position of Fe-SMA bars in the column cross-section. The results indicate that whilst the equivalent viscous damping ratio (EVDR) is typically in the range of 5–6 % for conventional segmental columns, the Fe-SMA prestressed segmental columns showed an EVDR higher than 10 %, indicating a strong energy dissipation behavior. The paper concludes by evaluating the applicability of the existing self-centering criteria to Fe-SMA prestressed columns.