Sheet forming of galvanized metals presents a great challenge for automobile industry. This is partially caused by a significant induced plastic deformation and high contact friction during forming, which results in pulverization, flaking and failure seen in the zinc layer. Cupping tests is used to study the formability of the galvanized sheets, for a better understanding of microscopic failure mechanisms of the zinc layer. The results show that during the cupping of the galvanized sheet, the zinc layers of each deformed zone encounter varying degrees of failure behaviors. The regions next to the fillets of the punch and the blank holder ring are more serious. In these severe failure areas, the residual stresses in the zinc layer are shown as tensile in nature; and increase with the degree of deformation increasing. The galvanized layers rupture prematurely prior to any damage seen in the steel substrate; thus leading to chalking, flaking and final failure. The results provide a theoretical guidance for improving formability of galvanized sheets.