In this paper, hole expanding tests are carried out in order to identify the effect of the hole process condition on the hole expanding ratio. Specimens with two different hole conditions are prepared: one is produced with punching process; and the other is reamed after punching to get smoother hole surface. The experimental results show that the facture mechanism and the hole expanding ratio are quite different with respect to the hole condition. The hole expanding ratio of a punched specimen is much smaller than that of a reamed one due to the difference of surface roughness and internal defects. For the thorough investigation of those effects, tensile tests of a specimen with a hole are performed. The fracture strain is obtained with different hole conditions and a finite element analysis of the hole flanging process carried out. The experimental results are confirmed and reevaluated by finite element analysis of the hole flanging process with ductile fracture criterion proposed.