Spout fluidized beds find widespread application in the process industry in granulation processes, in which efficient contacting between large particles, droplets and gas is of paramount importance. However, detailed understanding of the complex behavior of these systems is lacking. In this paper, we study the effect of the inter-particle interaction on the bed dynamics, by investigating the bed dynamics as a function of the restitution coefficient. This is done computationally, with the use of an extended discrete particle model. The examined flow regimes comprise the intermediate/spout-fluidization regime (B1), the spouting-with-aeration regime (B2) and the jet-in-fluidized-bed regime (B3). The pressure drop and the vertical particle velocity are compared to experimental data obtained by Link (Chem. Eng. Sci. 2007, 62, 195). The computed results with en = 0.97 show the same resemblance with the experiments. It is shown that, if the restitution coefficient decreases, more bubbles are present causing more pronounced heterogeneity (instability) in the overall flow structure of the bed, to more or less extent dependent on the flow regime. The particle velocity and root mean square profiles confirm the effect on the stability of the bed and show that the spout channel for cases B1 and B3 becomes unstable when the restitution coefficient decreases. For case B2, a transition occurs from the spouting-with-aeration to the intermediate/spout-fluidization regime at low restitution coefficient. These findings show the great importance of the influence of the restitution coefficient on the dynamics of the bed. During the granulation process, when the particles contain different moisture contents, regions in the bed exist that contain particles with different restitution coefficients. These regions thus experience different dynamics, resulting in varying performance. © 2009 Wiley-VCH Verlag GmbH & Co. KGaA, Weinheim.