An energy-based damage model is proposed and applied to predict the fracture initiation of the sheet metal forming process. The fracture mechanism is investigated through the plastic energy dissipation. The concepts of the damaging work and the fracture energy are proposed for the quantitative description of damage evolution and crack initiation. The developed formulations are implemented into the finite element program ABAQUS to simulate the biaxial stretching of sheet metals and to predict the fracture strains. The material parameter needed in the damage model for fracture prediction is determined by the stress-strain history of the uniaxial tensile test. The forming limits for aluminum alloy sheets under various strain paths are predicted by the present approach and then compared to the measured data quoted from the literatures [1,2]. Good agreements are found between this study and the previous results.