AbstractWe study the development of microstructure inside the shear band in granular media consisting of elliptical‐shaped particles. Plane strain biaxial compression test was simulated using two‐dimensional distinct element method. The generation of large voids and concentration of excessive particle rotation inside a shear band are found in a quite similar manner to those observed in natural soils. Evolution of the microstructure inside and outside the shear band is studied. The magnitude and direction of particle rotation inside the shear band is influenced by orientation of long axes of elliptical particles. Because of such particle rotations inside the shear band, the preferred alignment of particles becomes horizontal in the residual state, which results in a more anisotropic contact normal distribution oriented along the major principal stress axis. Copyright © 2010 John Wiley & Sons, Ltd.