The occurrence of shear localization in structural materials is often associated with bifurcation in continuum solid mechanics. Many approaches such as J2 corner theory and the void model have been proposed to simulate this phenomenon by the use of FEM. In this paper, a new approach with a basis in microstructural inhomogeneity has been proposed and successfully applied to simulate large strain deformation in uniaxial tension of aluminium alloys. The method, in addition, takes advantage of a more suitable hardening law for Al alloys — namely the Voce equation. Further, the influence of various yield criteria (i.e. von Mises, Hill's 1948 and Barlat's 1991) on the prediction of shear localization is discussed in the present work. The predicted shear band angle is also compared with the measured value.