Pressurized water pipelines buried in an urban environment are prone to bursting failures, threatening public safety and traffic convenience. The limited studies in literature just focused on soil fluidization while few studies considered ground failure, shear strain, soil erosion and the influence of leakage locations during pipe bursts. In this study, extensive experimental tests along with a finite difference method – discrete element method (FDM-DEM) solid–fluid coupling analysis were conducted to investigate these issues. It was disclosed that the failure development during pipe bursts can be divided into three stages, i.e., seepage diffusion, erosion cavity expansion, and soil fluidization. By digital image correlation (DIC) analysis of the experimental results, a wedge-shaped displacement zone in ground was identified, with peak shear strain near its boundaries. Moreover, it was revealed that leakage locations affected the expansion origin of erosion cavity; as the burial depths increased, the ground heave range increased linearly; the maximum water outflow distance was closely related to the internal pressures of buried pipeline, which could be modeled by a square root formula based on turbulent jet theory. Mesoscopic analyses revealed that finer particles were more susceptible to erosion during pipe bursts because of the low possibility of forming strong connections with surrounding particles. The findings yielded from this study can enhance the understanding of pipe bursts and help professionals mitigate potential damage.