A method is proposed in this article to study the effect of particle size distribution on eddy-current loss from the microstructure model of soft magnetic composite (SMC). Unlike the previous ones, the microstructural model in this article is constructed based on the simulation data of the powder densification process. The simulation process uses the discrete element method (DEM), and the construction process is completed by the proposed 3-D reconstruction program. The generated model is analyzed by the finite element method (FEM) to investigate the differences between the eddy-current loss of SMCs with multiple particle size distributions. The analysis separates the eddy-current loss into intra-particle and inter-particle ones at the microscopic level, and an equation applicable to the calculation of eddy-current loss is proposed accordingly. For the eddy-current loss inside the particles, when the frequency increases so that the skin depth is smaller than the average particle size, the loss is no longer the square of the frequency. The experimental results show that the equation can accurately calculate the eddy-current loss under different particle size distributions. Moreover, the degree of intermetallic insulation of the particles plays a crucial role in regulating the eddy-current loss, especially for smaller particle-size SMCs.