A numerical degradation model based on two key-functions, the so-called selection and breakage functions, is developed and implemented into a coupled DEM-CFD approach for investigating wood pellet degradation and fines formation during pneumatic conveying by particle-wall impact. The influence of operating conditions like air flow, product flow and solids loading ratio as well as of pipe component geometry on degradation is examined. Detailed insights into the flow field and particle motion are obtained. The inter-particle and particle-wall collisions are statistically analysed since they are the major cause of particle degradation.Apart from operating conditions, the bend radius is varied in four steps, supplemented by a 90°-Elbow as the worst-case scenario and a straight pipe section for reference. Increasing air flow rates, and thus higher particle velocities, as well as decreasing pellet mass flows and smaller bend radii result in progressive particle degradation. Particle-wall collisions turned out to be the major reason for particle breakage. Numerical results are compared to experimental data and show good agreement.