A particle discrete element method (DEM) was employed to simulate transverse cracking in laminated fiber reinforced composites. The microstructure of the laminates was modeled by a DEM model using different mechanical constitutive laws and materials parameters for different constituents, i.e. fiber, matrix and fiber/matrix interface. Rectangular, hexagonal and random fiber distributions were simulated to study the effect of fiber distribution on the transverse cracking. The initiation and dynamic propagation of transverse cracking and interfacial debonding were all captured by the DEM simulation, which showed similar patterns to those observed from experiments. The effect of fiber volume fraction was also studied for laminae with randomly distributed fibers. It was found that the distribution and volume fraction of fibers affected not only the transverse cracking path, but also the behavior of matrix plastic deformation and fiber/matrix interface yielding in the material.