This paper investigates the intricate particulate-scale mechanisms underlying the impact of fouling on the dynamic performance of ballasted tracks by using large-scale cubical cyclic test simulations through discrete element modelling (DEM). The DEM model was meticulously validated by comparing the predicted data with those obtained by large-scale, custom-designed laboratory testing on ballast. The results show that fouling increases sleeper settlement, while decreases the ballast breakage. Analysis on the spatial distribution of particle breakage reveals that bottom ballast experiences the most significant breakage, with damage decreasing with depth due to mitigated inter-particle interaction and reduced particle vibration. Microscopic analysis is also provided, focusing on contact distributions, contact network anisotropy, and particle vibration characteristics. The micro-mechanical investigations reveal that the fouling fines coat the ballast particles, resulting in an inevitable decrease in inter-particle contact forces within the aggregates, which accounts for the decreased ballast breakage observed in fouled assemblies.