Our laboratory recently developed a novel fluid energy milling process to manufacture polymeric composite particulates by breaking and coating particles in one step [1, 2]. The technology can be employed to manufacture a broad spectrum of polymeric particulate products, such as polymer additives, energetic materials, drug particles, advanced magnetic materials , and so on. The process simulation work described in this article is to help understand and further optimize this novel process. Fluent software was used to simulate the complicated two phase flow under different input air pressure levels. Velocity and pressure fields were calculated. Based on the information from wall stress distribution, flow field and experimental results, a primary particle-wall collision region was identified. The dependence of particle residence time on air pressure and particle shape was also investigated. The results explained why a grinding pressure increase is more energetically efficient for particle breakage, compared to a feeding pressure increase.