It is generally difficult to consider the fluid dynamic boundary problem in the traditional particle-fluid coupling algorithm, causing calculation errors owing to the mismatching of the fluid-solid boundary and affecting the accuracy of the results in the modeling of large deformation issues. In view of this problem, the dynamic updating method of fluid mesh is introduced and Darcy’s seepage equation and the particle-fluid interaction equation in dynamic mesh are derived. Based on the discrete element commercial software PFC2D, the particle-fluid coupling algorithm considering dynamic fluid mesh is developed. The proposed algorithm is applied to simulate the undrained shear biaxial test of saturated soil. The comparison result with the constant volume method verifies the effectiveness of the developed algorithm. Finally, the algorithm is used to simulate the undrained biaxial tests at different confining pressures. The law of the calculated results agrees well with that of the laboratory tests. By considering the problem of fluid dynamic boundary, the developed algorithm can obtain the fluid-solid boundary matching in the simulation of triaxial compression test and one-dimensional consolidation test or other cases in large deformations, which can help to improve the simulation accuracy and offer a theoretical reference for similar studies.