Cavity size hysteresis is an important phenomenon that affects the aerodynamics of any packed bed reactor significantly. Using the discrete element method approach, the mechanism of cavity size hysteresis in the presence of gas flow has been studied. The modeling results on cavity size have been compared with experiments and show a reasonable agreement. It is found that bed history, interparticle interaction forces, and gas drag all play an important role in the formation of cavities. The bed porosity in the decreasing gas velocity case was always found higher than the increasing gas velocity. The net gas drag at any location above the gas injection point in the bed decreases as the gas velocity is increased. It is also found that the change in interparticle interaction forces with gas flow rate is a major cause of the hysteresis phenomenon.