Hydro-mechanical punching was developed for preventing burr formation. Circular hole punching and Finite element method(FEM) analysis were conducted to investigate shearing characteristics of this process in comparison with conventional and mechanical counter punching. In this process hydrostatic pressing with appropriate medium was utilized instead of counter punch, which resulted in the delay of the point that the fracture is initiated and clean shearing surface was obtained. FEM analysis was utilized to find out optimum processing parameters and shearing mechanism for burr-free hole punching.