Granular bentonite (GB) with extended grain size distribution, a candidate material to construct engineered barriers, has low water permeability, high swelling potential and self-sealing capacity and is desirable in portability and workability. However, few systematic data combining microstructural descriptions and hydro-mechanical (HM) behavioural features are available. The present work investigates the HM performance of Wyoming (MX80)-type GB samples compacted at different initial water contents and at a fixed dry density of 1550 kg/m3. The samples' microstructure and its evolution along stress paths were studied using X-ray micro-computed tomography and mercury intrusion porosimetry. The results highlighted that the compacted GB presented local density heterogeneity and a multi-porosity network. Compaction at low initial water content increased the proportion of macropores and contributed to the enhancement of the compressibility and collapse on wetting under high stresses. During isochoric saturation, two stages of swelling development were identified. First, the flooding of macropores and matric suction reduction was related to the initial increase in swelling pressure. The secondary swelling was due to the water absorption of clay sheets in micropores and the expansion of micropores within granules and aggregates, during which the density of pore water increased. A decrease in the compaction water content can result in a higher pore water density after isochoric saturation and a lower water permeability. Finally, the water retention behaviour of the compacted sample within drying/wetting cycles was less sensitive to the initial pore size distribution. The current outcomes underline the critical role of the microstructure on the HM behaviour of compacted GB.