According to the Specification for structural steel buildings (AISC-LRFD 360-10), the nominal flexural capacity of I-beam sections having compact webs and noncompact or slender flanges can be estimated as the lower value obtained for the limit states of lateral-torsional buckling (LTB) and compression flange local buckling (FLB). The main assumption behind the approach is that there is no interaction between LTB and FLB limit states and they can be considered as two independent phenomena. In this paper a three dimensional finite-element model using ABAQUS is developed for the inelastic nonlinear analysis of I-beams having noncompact or slender flanges. The model is used to investigate the applicability of the AISC-LRFD approach in estimating the moment capacity of locally buckled steel built-up I-beams with various flange slendernesses. It was found that as the distance between the global and local buckling capacities becomes larger, there would be an interaction between the FLB and LTB limit states; indicating a considerable post-local-buckling capacity for such cases.