A display device which can compensate for variations of the threshold voltage of transistors and suppress variations in luminance, and a driving method thereof are provided. Current is supplied to a light emitting element and light is emitted from the light emitting element by following steps: in the first period initial voltage is stored in a storage capacitor; in the second period, voltage based on video signal voltage and the threshold voltage of the transistor is stored in the storage capacitor; and in the third period, the voltage stored in the storage capacitor in the second period is applied to a gate electrode of the transistor. By these operation processes, the current which compensates the effect of the variations of the threshold voltage of the transistor can be supplied to the light emitting element. Therefore, variations in luminance are suppressed.