Gravelly soil is a kind of special geotechnical material, which is widely used in the subgrade engineering of railway, highway and airport. Its mechanical properties are very complex, and will greatly influence the stability of subgrade engineering. To investigate the mechanical properties and failure mechanism of gravelly soils, this paper introduced and verified a new discrete element method (DEM) of gravelly soils in large scale direct shear test, which considers the actual shape and broken characteristics of gravels. Then, the stress and strain characteristics, particle interaction, particle contact force, crack development and energy conversion in gravelly soils during the shear process were analyzed using this method. Moreover, the effects of gravel content (GC) on the mechanical properties and failure characteristics were discussed. The results reveal that as GC increases, the shear stress becomes more fluctuating, the peak shear stress increases, the volumetric strain tends to dilate, the average particle contact force increases, the cumulative number of cracks increases, and the shear failure plane becomes coarser. Higher GC will change the friction angle with a trend of "stability", "increase", and "stability". Differently, it affects the cohesion with a law of "increase", "stability" and "increase".