This study describes a 3-D coupled peridynamics (PD) and discrete element method (DEM) that can handle both the fracture and the post-fracture behavior simultaneously. The primary objective of this study is to simulate the tensile failure behavior of compacted clay. A novel generalized bond softening model was proposed to capture the nonlinear stress-strain relationship often observed in compacted clay. This model is employed in peridynamics to reproduce the behavior from the initiation of cracks to the fracture. At the same time, the DEM is also introduced so that the interaction forces between the fragmented pieces after the fracture can be calculated including the frictional contact forces. The proposed PD-DEM model was validated by comparing the experimental results with the numerical simulations of the diametral compression test of compacted clay specimens with a single initial crack.