Agglomeration of fine particles in wet granulation is achieved by introducing a binder fluid onto a shearing mass of powder. Owing to the viscosity and the surface tension of the fluid, powder particles are bound together to form larger aggregates. Despite its widespread use in the chemical, pharmaceutical and food industries, little effort has gone into comprehensive modeling of the overall process from first principles. Modeling is important however, if one needs to estimate a-priori agglomerated granule characteristics such as size, shape and density, from knowledge of operating conditions and powder and binder physical and chemical properties. In this work, we present a model of wet granulation that is essentially a computer simulation of shear flows of solid particles, some of which are wet (covered by binder and therefore sticky) while the rest are dry. While simulations of shear flows of dry solid particles have earlier been reported in the literature, present work takes this simulation a step further and introduces a liquid surface layer to some particles in the domain. The additional force experienced by two relatively moving particles interacting via their binder-covered layers is modeled by using results from lubrication theory and Stokesian dynamics. The numerical simulations reflect two distinct regimes of agglomeration: that of granule growth and that of granule breakup. The granule growth regime takes place in all granulators including low and high shear machines while granule break-up is mainly characteristic of medium and high-shear devices in which agitation as generated by some mechanical means. During granule growth-simulations, the movement of sticky (binder covered) particles is studied in a constant shear, rapid granular flow regime. From these simulations, final granule size, shape and size distributions were obtained using a pattern-recognition technique. A second kind of simulation, also using rapid granular flow modeling,follows the deformation and break-up of an agglomerate made from particles held together by a liquid, viscous binder. Results from these simulations yield critical values of a dimensionless parameter that contains inertial and viscous dissipation effects (the so-called Stokes number). Below a critical value of the Stokes number, agglomerates are stable and only rotate in response to shear while above the critical value they break into several pieces. Around the critical value, they attain a steady elongation. These simulations allow one to obtain correlations between critical sizes, i.e., granules that deform somewhat but do not break, and different parameters of the problem.