Tube hydroforming (THF) is one of the plasticity processing methods. Tubular parts, for instance automotive components are expanded by forces such as internal pressure and axial compression in order to deform an objective shape. THF has less restriction on shape and size of workpieces owing to adopting the liquid tool. The demand of a small diameter magnesium alloy tubular parts have been increased for applying small medical and electronic devices. In this study, it was investigated that influence of process conditions such as processing temperature, internal pressure and axial feeding amount on formability of small diameter ZM21 magnesium alloy tube with outer diameter of 2.0mm and thickness of 0.20mm. Furthermore, the processing conditions for improving the formability of material in THF were examined. For prior evaluation of deformation characteristics in the warm THF of small diameter ZM21 magnesium alloy tube, a finite element (FE) simulation was conducted. The FE method (FEM) code was used LS-DYNA 3D for analysis of the FE model of the tube and the dies. The material characteristics were obtained by tensile test and fracture test. From FE analysis results, it was elucidated that effect of the processing temperature, the variable internal pressure and the axial feeding amount on deformation behavior. The formability of ZM21 magnesium alloy tube was improved by processing at 250 C. The difference of deformation characteristic between FE results and experimental results was compared. As the results, the processing condition which could improve the formability of ZM21 tube was clarified using this FE model. The effect of adding the straightening stage in the loading path after the preform on formability was investigated. The thinning of the wall thickness of the tube was inhibited by calibration after the axial feeding.