A cold expansion process is used to prolong the fatigue life of a structure under cyclic loadings. The process produces a beneficial compressive residual stress zone in the hole vicinity, which retards the initiation and propagation of the crack at the hole edge. In this study, a three-dimensional finite element model of the split-sleeve cold expansion process was developed to predict the resulting residual stress field. A thin rectangular aluminum sheet with a centrally located hole was considered. A rigid mandrel and an elastic steel split sleeve were explicitly modeled with the appropriate contact elements at the interfaces between the mandrel, the sleeve, and the hole. Geometrical and material nonlinearities were included. The simulation results were compared with experimental measurements of the residual stress. The influence of friction and the prescribed boundary conditions for the sheet were studied. Differences between the split-sleeve- and the non-split-sleeve model solutions are discussed.