With the exploitation of marine resources, the development of maintenance operation technology for subsea pipelines transporting oil and gas has become the focus worldwide. Diamond bead wire serves as important engineering equipment in subsea pipeline maintenance, and the study of the wear mechanism of diamond grains on the beads is key to improving the cutting efficiency and lifetime of diamond bead wire. In this work, a theoretical model of the mechanical wear rate of the diamond grain was established, and a simulation model of the diamond grain cutting X65 pipeline steel was developed by applying smoothed particle hydrodynamics method. By studying the effects of the cutting factors of the diamond grain on mechanical wear, the mechanisms of adhesive wear, abrasive wear, and fatigue wear were clarified. The results indicate that the diamond grain in line contact or large surface contact with X65 steel contributes more to wear rate reduction than point contact; The mechanical wear rate predominated by adhesive wear and abrasive wear of the diamond grain increases with the increase of cutting speed and depth. And when the cutting speed is 22–26 m/s and the depth is 20–30 μm, the growing trend of the mechanical wear rate turns gentle, which is more suitable to balance improving cutting efficiency and reducing mechanical wear.