An integrated simulation of powder effects on particle temperature and microstructural evolution in laser directed energy deposition additive manufacturing process was carried out. The spatial distribution of the flying powder particles was simulated by the discrete element method to calculate the energy for the flying powder particles under the laser-particle interaction with electromagnetic wave analysis. Combined with the phase field method, the influence of particle size on the microstructural evolution was studied. The microstructural evolution is validated through comparison with experimental observation. Results indicate that the narrow particle size distribution is beneficial to obtaining a more uniform temperature distribution on the deposited layers and forming smaller equiaxed grains near the side surfaces of the sample. Appropriate powder particle size is beneficial to the conversion of the electromagnetic energy into heat. Particles with small size are recommended to form equiaxed grains and to improve product quality. Appropriate powder flow rate improves the laser energy efficiency, and higher powder flow rate leads to more uniform equiaxed grains on both sides of the cross-section.