This study examines the in-plane cyclic response of historic masonry elements using a micro modelling approach that incorporates damage-plasticity and surface-based cohesive-contact interface approaches. The nonlinear procedures adopted are validated against tests on dry and wet panels in diagonal compression and large walls under reverse shear-compression loading. Considering the inherent material variability, the numerical results are shown to correlate well with the test results in terms of stiffness, strength, ductility, overall hysteretic response, and cyclic degradation. Based on the validated models, followed by exploratory sensitivity studies, detailed parametric assessments are carried out. The parameter ranges are selected to cover historical masonry materials, consisting of bricks and mortar, and address both dry and wet conditions. Four typical failure modes, namely, flexural strut crushing, diagonal cracking, flexural toe crushing, and mixed sliding, in an order of increasing ductility, are quantified and discussed. It is shown that wet masonry walls have an average reduction of 16% in terms of stiffness and capacity compared with the dry counterparts. Although the failure modes in dry and wet wall pairs are similar, some cases are identified in which the weaker moisture-affected joint strength results in a shift to a more brittle mode. It is also shown that the ductility of the flexural strut crushing mode, which often governs the failure of historical masonry due to its low strength, is considerably overestimated in existing guidelines. Based on the results of the parametric investigations, analytical models for predicting the inelastic response are evaluated, and suggestions for modifications are proposed.