The effect of void nucleation is incorporated in a recently proposed material model that accounts for a combination of kinematic hardening and isotropic hardening of a porous ductile material. Since each of plastic dilatancy, void nucleation and yield surface curvature have a strong influence on predictions of plastic flow localization, the present material model can be used to study the interaction of these effects. Nucleation controlled by the plastic strain as well as nucleation controlled by the maximum normal stress on the particle-matrix interface are modelled. The predictions of the material model, for various combinations of parameters, are illustrated by analyses of shear band formation under plane strain or axisymmetric conditions, and by analyses of necking in biaxially stretched sheets.