Full stress/displacement compatibility conditions at interfaces by considering the bilinear elasto-plastic core are investigated for the first time. The paper uses the concepts of the improved high-order sandwich panel theory (IHSAPT) and generalizes the approach to account for the bending response based on the unique mechanism of geometrical and material nonlinearity. The analytical results of the model are presented and compared with the experimental results. Emphasis is placed on satisfying shear stress compatibility conditions at the interface along with the effects of the plastic modulus of the core to provide a unique perspective on the bending response of sandwich panels. The results of the present approach are in good agreement with experimental results in terms of load–displacement, including the localized effects attributed to the flexible core. It is also shown that the present model can identify and quantify the localized effects of shear stress continuity at interfaces while conventional high-order sandwich panel models available in the literature fail to do so. The results of the study contribute to the effects of shear and normal plastic modules of the core on transverse normal and shear stress distributions at top and bottom interfaces, stress and displacement components through the thickness of the core as well as the force and moment resultants, and transverse displacements in the face sheets, which may be used as benchmark results for future studies.