Tube hydroforming (THF) is an important manufacturing technology for producing tube components by means of fluid pressure. In comparison to other basic forming processes like deep drawing, forming steps can be reduced and more complex shape is allowed. In this work, it was aimed to establish the forming limit curve (FLC) of stainless steel tube grade 304 for the THF process by using finite element (FE) simulations coupled with the Gurson–Tvergaard–Needleman (GTN) damage model as failure criterion. The parameters of the GTN model were obtained by metallography analysis, tensile test, plane strain test of the examined steel in combination with the direct current potential drop (DCPD) and digital image correlation (DIC) techniques. These parameters were well verified by comparing the predicted FLC of steel sheet with the experimental FLC gathered from the Nakazima test. Then, the FLC of steel tube 304 was established by FE simulations coupled with the damage model of tube bulging tests. During the bulge tests, pressure and axial feed were properly controlled in order to generate the left-hand FLC, while pressure and external force needed to be simultaneously incorporated for the right-hand FLC. Finally, the FLC was applied to evaluate material formability in an industrial THF process of the steel tube.