This study proposed an analytical method to evaluate a local allowable wall thickness (LAWT) for locally thinned pipe subjected to internal pressure and bending moment. In this method, the stresses in the thinned region were calculated by finite element analysis and plastic collapse was applied as a failure criterion of thinned pipe. Using this method, LAWT for a simplified thinned pipe was evaluated with variation in axial extent of thinned area, and it was compared with allowable wall thickness provided by previous pipe wall thickness criteria. The results showed that the LAWT was lower, about 50%, than that calculated by construction code or ASME Code N-597, and it was higher, about 2 times, than that estimated by evaluation model based on pipe experiments. In addition, LAWT was decreased with increasing axial extent of thinned area and saturated with further increase in axial extent. And, the variation in LAWT with axial extent of thinned area depended on type of load, especially a magnitude of bending moment, considering in the evaluation.