An innovative methodology for the determination of forming limits is proposed, based on the strain energy density criterion. In the first section of this paper a modification of the strain energy density criterion, that has mainly been applied for crack propagation in fracture mechanics, is performed, in order to become applicable in metal forming processes. In the second section, experimental methods and Finite Element (FE) analysis for the case of deep drawing forming process are used for the verification of the methodology. Based on the simulation methodology, the forming limits and some process parameters namely, forming temperature, punch radius, punch profile radius and strain rate sensitivity of magnesium alloys AZ31 and WE43 are determined. The optimization results for the studied case show that magnesium alloys have limited formability especially at room temperature; however the formability can be improved by forming at higher temperatures. Finally, formability is improved as the punch and punch profile radii increase up to an optimum value.