Hydraulic expansion of a tube into a grooved tubesheet is modeled as an elastic-plastic process. A special shell theory is used to obtain the tube residual stresses in the vicinity of the grooves. It is found that the maximum tensile residual stresses occur at the inside surface of the tube, but their magnitudes are lower than those in the transition region. The results also suggest the use of a higher hydraulic forming pressure for grooved joints than for ungrooved joints.