In the present work, a full nonlinear Timoshenko beam employing nonlinear shape functions is developed. The extended Hamilton principle is employed for deriving the differential equations of motion and the associated boundary conditions. The general form of the boundary conditions is then utilized to determine the static solution of the beam motion. Using this solution for the deformation and rotation of the beam, the nonlinear shape functions of the beam are identified, which leads to the linear and nonlinear mass and stiffness matrices of the Timoshenko beam element. The nonlinear dispersion diagram incorporating the non-linear corrections is obtained using the Linstedt–Poincaré perturbation method. An analysis of the effect of internal transverse shear and bending on the nonlinear dispersion characteristics of wave propagation in two-dimensional periodic network materials made of nonlinear Timoshenko beams is done. The formulated theory shows that the percentage of correction factor of the nonlinear kinematics versus the linear dynamical behavior is inversely proportional to the frequency amplitude. The shear and extension modes are shown to have the higher effect in the non-linear correction term in comparison to the flexural mode.