Corrosion assessment and burst pressure prediction of line pipes with corrosion defects are essential for the integrity assessment of steel transmission pipelines. The failure assessment methods proposed in codes or handbooks may be overly conservative or exhibit significant scatter in their predictions. In this paper, the effects of two key parameters—the flow stress and Folias bulging factor, on predicting the failure pressure of pipelines with defects are studied. The Folias bulging factor is suggested by fitting the results from finite element (FE) analysis. Then, a new prediction method for the failure pressure of pipelines with defects is proposed. The failure pressures predicted by the proposed method are in better agreement with the experimental results than the results by the other methods such as B31G, MB31G, Det Norske Veritas (DNV), and rectangular parabolic area (RPA).