Leakage from buried pipelines can lead to an increase in the water content of the subgrade soils and a rise in the water table, leading to soil loosening, erosion, and ultimately the formation of hidden voids and roadway collapses. This study presents a Discrete Element Method (DEM) and validates its accuracy by utilizing cavity data from model experiments. It investigates the mechanism of seepage erosion resulting from pipe leakage and analyzes the development of the soil arch effect. Furthermore, it discusses the influence of sand void ratio and particle size on sand seepage erosion. The results indicate that the erosion area is primarily affected by the void ratio and particle size. In comparison to soil particles ranging from 0.1 mm to 5 mm and 2 mm to 5 mm, those with sizes between 0.1 mm and 2 mm generate areas of erosion and loosening that are approximately 40% larger. The proposed model offers a precise analysis of the developmental process and the extent of seepage erosion, thereby contributing to the prediction of potential road cavity areas based on dynamic changes in key factors such as subgrade soil type and groundwater level.