A meso-scale particle model is presented to simulate the expansion of concrete subjected to alkali-aggregate reaction (AAR) and to analyze the AAR-induced degradation of the mechanical properties. It is the first attempt to evaluate the deterioration mechanism due to AAR using the discrete-element method. A three-phase meso-scale model for concrete composed of aggregates, mortar and the interface is established with the combination of a pre-processing approach and the particle flow code, PFC2D. A homogeneous aggregate expansion approach is applied to model the AAR expansion. Uniaxial compression tests are conducted for the AAR-affected concrete to examine the effects on the mechanical properties. Two specimens with different aggregate sizes are analyzed to consider the effects of aggregate size on AAR. The results show that the meso-scale particle model is valid to predict the expansion and the internal micro-cracking patterns caused by AAR. The two different specimens exhibit similar behavior. The Young's modulus and compressive strength are significantly reduced with the increase of AAR expansion. The shape of the stress–strain curves obtained from the compression tests clearly reflects the influence of internal micro-cracks: an increased nonlinearity before the peak loading and a more gradual softening for more severely affected specimens. Similar macroscopic failure patterns of the specimens under compression are observed in terms of diagonal macroscopic cracks splitting the specimen into several triangular pieces, whereas localized micro-cracks forming in slightly affected specimens are different from branching and diffusing cracks in severely affected ones, demonstrating different failure mechanisms. Copyright © 2012 John Wiley & Sons, Ltd.