Thin-walled steel cylinders surrounded by an elastic medium, when subjected to uniform external pressure may buckle. In the present paper, using a two-dimensional model with nonlinear finite elements, which accounts for both geometric and material nonlinearities, the structural response of those cylinders is investigated, toward developing relevant design guidelines. Special emphasis is given on the response of the confined cylinders in terms of initial imperfections; those are considered in the form of initial out-of-roundness of the cylinder and as an initial gap between the cylinder and the medium. Furthermore, the effects of the deformability of the surrounding medium are examined. The results indicate significant imperfection sensitivity and a strong dependency on the medium stiffness. The numerical results are employed to develop a simple and efficient design methodology, which is compatible with the recent general provisions of European design recommendations for shell buckling and could be used for design purposes.