The coefficient of earth pressure at rest K0 is often used to determine the stress state of a soil in the design of retaining walls, excavations and foundations. The most commonly used equation was proposed originally by Jaky (1944) which expresses the ratio of horizontal to vertical stress in a normally consolidated soil as K0 = 1 - sin φ, where φ is the effective angle of internal friction of the soil. This raises the question as to why the at rest stress state in a soil, which is not at failure, should be governed by the failure friction angle of the soil. The expression is often reported as empirical in nature however, Jaky arrived at the expression from an analytical approach. This paper explores the micromechanics of cohesionless soils by investigating the effect of soil fabric and the evolution of the lateral pressure under confined compression using the Discrete Element Method (DEM). Many DEM models use spherical particles due to their greater efficiency. However, particle sphericity leads to the over-prediction of the lateral pressure ratio for a typical granular soil during a confined K 0 compression test. The lack of particle interlocking that is associated with spherical particles leads to a greater transmission of forces laterally in an assembly under confined compression, resulting in a higher K0 value.