A typical multi-layer dam foundation composed of strong permeable gravel layer, fine sand layer and strong permeable gravel layer is calibrated accurately by using three-dimensional particle flow software (PFC3D) and "inversion simulation method", and the development process of seepage deformation of the multi-layer dam foundation is simulated effectively and the characteristics of particle movement and particle loss in the process of seepage deformation of the dike foundation are obtained. The results show that: The seepage damage mainly occurs in the upper gravel layer. With the continuous occurrence of seepage damage, it gradually affects the lower soil layer. The fine particles in the layer move between the pore of the skeleton particles and then gradually lose out, which is a typical piping failure. After the piping failure of the upper sand-gravel layer, the particles of the middle fine sand layer first lost in Z4 area just below the piping mouth, while the particles of the other areas lost relatively late, and the amount of particle loss increased with the increase of calculation time, resulting in small-scale deformation of the fine sand layer. With the increase of calculating time, the subsidence of the upper gravel layer is gradually increasing. When the loss of fine grains in the upper gravel layer reaches a certain extent, the embankment foundation will be damaged, which will cause great harm to the upper buildings. This study provides a reference for understanding the seepage failure of multi-layer embankment foundation flow from a micro-perspective.