Abstract: Capillary action is one of significant sources of matric suction in the unsaturated soil. So we propose a new method based on two-dimensional Discontinuous Deformation Analysis(DDA)to simulate the distribution of capillary water and to calculate soil water characteristic curve(SWCC)under different saturation. Firstly,the radius of capillary water meniscus is calculated with iterative algorithm method,and circle center trajectory intersection method is used to determine capillary water distribution in this algorithm. Then,the matric suction,calculated with Young-Laplace equation,is taken into account in the control equation of the original DDA method with the surface tension. Moreover,in order to verify the accuracy of the algorithm,an ideal loess structure model is established. In this model,the soil particles used are mainly coarse particles with high content of loess. The particle size distribution and shape accord with the actual values. And then,the model is used to simulate the distribution of capillary water and to calculate soil water characteristic curve(SWCC). The results show that simulated SWCC contains boundary effect stage,transition stage and residual stage. The distribution of capillary water is simulated at each stage. In addition,the result comparison between the numerical simulation and the experimental data shows the simulation results agree well with experimental data,which suggest that this method is available for simulating capillary action in unsaturated soil.