Decoupled parallel mechanisms (DPMs) have the characteristics of compact structure and simple control with wide applications. This paper presents a new method of type synthesis for DPMs by virtue of Lie groups and screw theory. The method consists of synthesis at limb level and configuration level. At limb level, Lie group is used to synthesize the limbs with required DOFs. At configuration level, screw theory is adopted to determine configuration with synthesized limbs that satisfy the type synthesis criteria of DPMs. The type synthesis criteria including limb decoupling and selection of the driving pairs are presented. Upon the formulation, the procedure of type synthesis of DPMs is developed. Type synthesis is conducted with the proposed method, which leads to new spatial and planar fully decoupled 2T1R mechanisms.