A forming limit diagram (FLD) shows the various deformation states and represents the forming limits of sheet metal in the various sheet metal forming processes. In practice, experimental determination of a forming limit curve (FLC) is very time consuming procedure and requires special expensive equipments. Finite element simulation is an alternative method to predict FLD. In this paper, the effect of work hardening and anisotropy on FLC of drawing quality steel has been investigated and compared by using finite element method. For this purpose, the out-of-plane stretching test with hemispherical punch is simulated by finite element software ABAQUS 6.4. The limit strains, which are determined with localized necking, are specified by tracing the thickness strain and its first and second derivatives versus time at thinnest node. By doing this method for different specimens the strain based FLC has been determined. To validate the results, the numerical FLC has been compared with experimental and analytical forming limit curve. Then, the stress based FLD is determined by plotting the calculated principal stresses at the localized necking. Finally, the effect of work hardening and anisotropy has been investigated. The results shown that by increasing work hardening exponent the strain based FLC increases, but the stress based FLC does not change considerably. However, by increasing the value of normal anisotropy the stress based FLC increases, but the strain based FLC does not change considerably.