This paper proposes a new welding-based solution that significantly increases the rotation capacity of a stiffened welded knee joint between cold-formed rectangular hollow sections under opening moment. The proposed solution is more economical than the use of internal sleeves and can be applied to new as well as existing structures. The solution involves the use of extra layers of weld on the inner (tension) flange of a stiffened welded knee joint. Laboratory test results are presented to demonstrate that the solution enabled such a joint between DuraGal C450 150 × 50 × 4 or 150 × 50 × 5 rectangular hollow sections manufactured to AS 1163 to satisfy the rotation capacity requirement specified for plastic design of steel frames. The reason why the new solution results in increased rotation capacities is explained in terms of strain redistribution and strain reduction in the tensile regions around the knee joints.