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Abstract Many geo‐engineering applications, for example, enhanced geothermal systems, rely on hydraulic fracturing to enhance the permeability of natural formations and allow for sufficient fluid circulation. Over the past few decades, the phase‐field method has grown in popularity as a valid approach to modeling hydraulic fracturing because of the ease of handling complex fracture propagation geometries. However, existing phase‐field methods cannot appropriately capture nucleation of hydraulic fractures because their formulations are solely energy‐based and do not explicitly take into account the strength of the material. Thus, in this work, we propose a novel phase‐field formulation for hydraulic fracturing with the main goal of modeling fracture nucleation in porous media, for example, rocks. Built on the variational formulation of previous phase‐field methods, the proposed model incorporates the material strength envelope for hydraulic fracture nucleation through two important steps: (i) an external driving force term, included in the damage evolution equation, that accounts for the material strength; (ii) a properly designed damage function that defines the fluid pressure contribution on the crack driving force. The comparison of numerical results for two‐dimensional test cases with existing analytical solutions demonstrates that the proposed phase‐field model can accurately model both nucleation and propagation of hydraulic fractures. Additionally, we present the simulation of hydraulic fracturing in a three‐dimensional domain with various stress conditions to demonstrate the applicability of the method to realistic scenarios.