The buckling characteristics of cylindrical shells with a circular hole, under axially compressed loads, have been analyzed and the results have been compared with existed experimental results. Deflection function with decay factor is assumed, and stress distribution around a circular hole in tensioned infinite plate is used for formulating buckling energy function. Applying Rayleigh Ritz procedure to this energy function, characteristic equation of eigenvalue problem is determined. Buckling load is defined by the minimum value of eigenvalues calculated according to several decay factors, and as the radius ratios of a circular hole (a/R) and shell thickness ratios (R/t) are varied, the reducing characteristics of buckling load are studied. As a result, buckling loads are reduced by about 50% according to some radius ratios ($a/R{geq}0.15$) of circular hole and are not nearly affected by shell thickness ratio(R/t).