In this study, a forming magnesium alloy circular cup was simulated accounting for heat transfer at elevated temperatures. In order to predict the failure of magnesium alloy sheet during simulation, the forming limit diagram, which is used in sheet metal forming analysis to determine the criterion for failure, was investigated. For the failure prediction in the simulation accounting for heat transfer, the forming limit diagram for a temperature the same as the temperature of the blank element was used. The result of the simulation showed that the drawn depth increases with the increase of the die-holder temperature, and is in accord with the experimental results above the die-holder temperature of $150^{circ}C$. The forming limit diagram provided a good guide for the failure prediction of warm forming simulation accounting for heat transfer. In addition, the effect of the tool shoulder radius on the drawn depth at various tool temperatures is verified using the simulation conditions which agreed with the experimental results.