An energy method for assessing liquefaction potential of granular soils was developed based on laboratory tests and observational data obtained in past major earthquakes. Cyclic triaxial and cyclic simple shear tests were conducted and the results show that a unique relation exists between the dissipated energy during cyclic load and the excess pore pressure that eventually led to liquefaction failure. This unique relation has been combined with an energy attenuation equation to develop a criterion for defining the liquefaction potential of a site. Parameters for the criterion were evaluated from 136 sites involved in 13 major earthquakes over the world. A comparison was made between the energy method and the commonly used stress method. The energy method was found to be simpler to apply and more reliable. Key words: energy, earthquake, liquefaction potential, standard penetration test, laboratory cyclic test, excess pore pressure, granular soils, case records.