Two-dimensional numerical simulations were conducted using the distinct element method (DEM) to examine the influences of particle size distribution (PSD) and interparticle friction μp on the nature of deformation in granular fault gouge. Particle fracture was not allowed in this implementation but points in PSD space were examined by constructing assemblages of particles with self-similar size distributions defined by the two-dimensional power law exponent D. For these numerical experiments, D ranged from 0.81 to 2.60, where D=1.60 represents the two-dimensional equivalent of a characteristic PSD to which cataclastically deforming gouge is thought to evolve. Experiments presented here used μp values of 0.10 and 0.50 and were conducted using normal stress &sgr;n on the shear zone walls of 70 MPa. Shear strain within these simulated assemblages was accommodated by intermittent displacement along discrete slip surfaces, alternating between broadly distributed deformation along multiple slip planes and highly localized deformation along a single, sharply defined, subhorizontal zone of slip. Slip planes corresponded in orientation and sense of shear to shear structures observed in natural gouge zones, specifically Riedel and Y shears; the oblique Riedel shears showed more extreme orientations than typical, but their geometries were consistent with those predicted for low-strength Coulomb materials. The character of deformation in the shear zone varied with PSD due to changes in the relative importance of interparticle slip and rolling as deformation mechanisms. A high degree of frictional coupling between large rolling particles in low D (coarse-grained) assemblages resulted in wide zones of slip and broadly distributed deformation. In higher D assemblages (D>=1.60), small rolling particles self-organized into columns that separated large rolling particles, causing a reduction in frictional resistance within the deforming assemblage. This unusual particle configuration appears to depend on a critical abundance of small particles achieved at D≈1.60 and may enable strain localization in both real and simulated granular assemblages. ¿ 1999 American Geophysical Union