A lattice Boltzmann method is presented to simulate a particle-laden droplet subject to a simple shear flow, where the effect of particle concentration, viscosity ratio of droplet to ambient fluid and particle inertia on droplet deformation and particle movement is explored. With the increase of particle concentration, droplet deformation increases because of reduced interfacial free energy caused by reduced fluid-fluid interface length. When a sufficient number of particles are added to interface, droplet deformation monotonically decreases with viscosity ratio, but first rises and then declines for clean interface. This difference is attributed to an increased apparent viscosity of the ambient fluid by added particles. The particle inertia enhances droplet deformation remarkably only when the Reynolds number is relatively high. In addition, particles are found to revolve around the deformed droplet along the interface with a period, which is determined solely by deformation parameter at the viscosity ratio of unity. • A LBM is developed to simulate the fluid-fluid-solid three-phase flows. • The particle's revolution period can be determined by the droplet deformation. • The deposition of particles at the interface can enhance the droplet deformation.