In order to study the influence of water content on the mechanical properties of sandstone and evolution of crack propagation, laboratory compression tests and Engineering Discrete Element Method (EDEM) numerical simulation of sandstone under different conditions were carried out by the RMT-150B rock mechanics test system. The sandstone samples were from Nanyang, Henan Province, containing a total of 12 rock samples. Under the confining pressure of 0, 5, 10, and 20 MPa, the rock samples with 0%, 1.81%, and 3.24% water content were tested. The findings demonstrated that as the sample’s water content grew, the peak strain increased but the peak strength, elastic modulus, maximum energy rate of individual acoustic emission events, and cumulative acoustic emission energy rate all reduced. While the ratio of tensile cracks to shear cracks inside the rock samples rose with increasing water content, the failure mode of sandstone changes from shear failure to tensile failure with the increase of water content, but the sandstone specimens in the three conditions exhibited shear macroscopic fracture surfaces. Research results will provide reference for the safe construction of underground projects in water rich areas.