With the trend towards manufacturing large complex shaped parts by cold forging followed by hot forging, problems such as internal cracking during the induction heating of a cold-forged workpiece have become common. One way to solve this problem is to have an annealing step after cold forging. However, this solution adds to the manufacturing operation the additional cost of annealing and post-annealing lubrication. In this investigation, internal cracking was studied by developing numerical models of the cold forging and induction heating processes. These models were applied to several industrial cases of failed as well as successfully forged parts. It was found that the main causes of internal cracks include excessive deformation during cold forging which damaged the material matrix and high tensile thermal stresses during induction heating which led to crack propagation. On the basis of this analysis, recommendations for preventing internal cracks were developed for H8620 steel, which provided for the design of a successful cold forging deformation sequence and induction heating cycles.