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Wood pellets are an important source of renewable energy. Their mechanical strength is a crucial property. In this study, the tensile strength of pellets made from oak, pine, and birch sawdust with moisture contents of 8% and 20% compacted at 60 and 120 MPa was determined in a diametral compression test. The highest tensile strength was noted for oak and the lowest for birch pellets. For all materials, the tensile strength was the highest for a moisture content of 8% and 120 MPa. All pellets exhibited a ductile breakage mode characterised by a smooth and round stress–deformation relationship without any sudden drops. Discrete element method (DEM) simulations were performed to check for the possibility of numerical reproduction of pelletisation of the sawdust and then of the pellet deformation in the diametral compression test. The pellet breakage process was successfully simulated using the DEM implemented with the bonded particle model. The simulations reproduced the results of laboratory testing well and provided deeper insight into particle–particle bonding mechanisms. Cracks were initiated close to the centre of the pellet and, as the deformation progressed, they further developed in the direction of loading.