Numerical simulations, by the discrete element method (DEM), of a model granular assembly, made of spherical balls, are used to investigate the influence of a small amount of an interstitial wetting liquid, forming capillary bridges between adjacent particles, on two basic aspects of granular material rheology: (1) the plastic response in isotropic compression, and (2) the critical state under monotonic shear strain, and its generalization to steady, inertial flow. Tensile strength F0=πΓa, in contacts between beads of diameter aa joined by a small meniscus of a liquid with surface tension Γ, introduces a new force scale and a new dimensionless control parameter, P∗=a2P/F0, for grains of diameter a under confining stress P. Under low P*, as cohesion dominates, capillary cohesion may stabilize very loose structures. Upon increasing pressure P in isotropic compression, such structures gradually collapse. The resulting irreversible compaction is well described by the classical linear relation between logP* and void ratio in some range, until a dense structure forms that retains its stability without cohesion as confinement dominates for large P*. In steady shear flow, with uniform velocity gradient γ˙=∂v1/∂x2γ˙=∂v1/∂x2 under normal stress P=σ22, the apparent internal friction coefficient, which is defined as μ∗=σ12/σ22, depends on P* and inertial number (reduced shear rate) I=γ˙√m/aP, and so does solid fraction Φ. The material exhibits, as P* decreases, a strongly enhanced resistance to shear (larger μ*). In the quasistatic limit, for I→0, it is roughly predicted by a simple effective pressure assumption by which the capillary forces are deemed equivalent to an isotropic pressure increase applied to the dry material as long as P*≥1, while the yield criterion approximately assumes the Mohr-Coulomb form. At lower P*, such models tend to break down as liquid bonding, causing connected clusters to survive over significant strain intervals, strongly influences the microstructure. Systematic shear banding is observed at very small P*