In this study, we propose a new distinct element method (DEM) that considers element deformability for failure analysis of masonry structures. Many people in developing countries live in masonry structures. In earlier DEM schemes, a structure is modeled as an assembly of rigid elements, but element deformability cannot be considered. The deformation of a structure can be modeled by overlapping between elements, but Poisson's effect cannot be modeled. However, bricks used in developing countries can readily be deformed due to their low stiffness. Therefore, it is preferable to also consider element deformability in the DEM. In the new DEM, each element is divided into two parts: an inner part that considers deformation of the element itself, and an outer part that deals with contact between elements. Deformation of a structure can be modeled by overlapping between elements and deformation of the elements themselves. The validity of the method is confirmed through a comparison of the elastic deformation with a finite element model. It was found that the original DEM and the proposed method show different failure patterns of seismic behavior due to Poisson's effect.