As a practical and effective seismic resisting technology, the base isolation system has seen extensive applications in buildings and bridges. However, a few problems associated with conventional lead-rubber bearings have been identified after historical strong earthquakes, e.g., excessive permanent deformations of bearings and potential unseating of bridge decks. Recently the applications of shape memory alloys (SMA) have received growing interest in the area of seismic response mitigation. As a result, a variety of SMA-based base isolators have been developed. These novel isolators often lead to minimal permanent deformations due to the self-centering feature of SMA materials. However, a rational design approach is still missing because of the fact that conventional design method cannot be directly applied to these novel devices. In light of this limitation, a displacement-based design approach for highway bridges with SMA isolators is proposed in this paper. Nonlinear response spectra, derived from typical hysteretic models for SMA, are employed in the design procedure. SMA isolators and bridge piers are designed according to the prescribed performance objectives. A prototype reinforced concrete (RC) highway bridge is designed using the proposed design approach. Nonlinear dynamic analyses for different seismic intensity levels are carried out using a computer program called "OpenSees". The efficacy of the displacement-based design approach is validated by numerical simulations. Results indicate that a properly designed RC highway bridge with novel SMA isolators may achieve minor damage and minimal residual deformations under frequent and rare earthquakes. Nonlinear static analysis is also carried out to investigate the failure mechanism and the self-centering ability of the designed highway bridge.