This paper presents the results of analysis of the deformation and breakage of spherical agglomerates embedded in a bed of particles and subjected to shearing, a situation commonly encountered in powder granulation. The study is based on three dimensional distinct element method (DEM), in which the inter-particle interactions are governed by theories of contact mechanics. An agglomerate was first generated in a bed of particles having the same size as the primary particles forming the agglomerate. Different size ratios (i.e., the ratio of the diameter of agglomerate to the diameter of surrounding particles) in the range 3-10 were then simulated by varying the size and number of and 0.3, respectively) and their surrounding particles. The agglomerates were subjected to shearing (shear rate and strain of about 300s(-1) breakage characteristics were analysed. The agglomerate with the size ratio 10 does not break but undergoes some structural deformation by re-arrangements of contacts. However, the agglomerates with ratio about 7 or smaller suffer breakage. For the size ratio equal or smaller than 5, the agglomerate breaks significantly leading to full disintegration. The results of stress analysis of the agglomerates suggest that the resistance to breakage for the agglomerate with size ratio of 10 is due to the nature of stresses exerted on the agglomerate. For large size ratios the stress on the agglomerate is predominantly hydrostatic. The ratio of deviatoric stress over hydrostatic pressure increases as the size ratio of the agglomerate is reduced. The nature of stresses experienced by agglomerates with smaller size ratios is predominantly deviatoric, thus causing shear deformation and breakage. The results are compared with physical experiments and a satisfactory agreement is obtained. (c) 2006 Elsevier Ltd. All rights reserved.