Three-dimensional spacer fabric is a type of one-piece sandwich structure consisting of two outer layers and vertical and inclined spacer monofilaments. It behaves like a cushioning material, having linear, plateau, and densification stages under compression. This article elucidates the compression mechanism of a typical spacer fabric in terms of global deformation, local deformation, and internal contact behavior of spacer monofilaments through finite element simulation. While the linear stage is post-buckling of spacer monofilaments with tight constraints, the plateau stage is a combination of post-buckling, torsion, rotation, and contact of spacer monofilaments. The densification stage is attributed to the contact between spacer monofilaments and outer layers, which decreases the effective length to bear the load and enhances the constraints on the spacer monofilaments. The vertical spacer monofilaments with almost triple the normal strains of the inclined ones contribute more to compression resistance.