Powder compaction is a well-established process for manufacturing a wide range of products, including engineering components and pharmaceutical tablets. During powder compaction, the compacts (green bodies or tablets) produced need to sustain their integrity during the process and possess certain strength. Any defects are hence not tolerable during the production. Therefore, understanding failure mechanisms during powder compaction is of practical significance. In this paper, the mechanisms for one typical failure, capping, during the compaction of pharmaceutical powders were explored. Both experimental and numerical investigations were performed. For the experimental study, an instrumented hydraulic press (a compaction simulator) with an instrumented die has been used, which enable the material properties to be extracted for real pharmaceutical powders. Close attentions have been paid to the occurrence of capping during the compaction. An X-ray Computed Microtomography system has also used to examine the internal failure patterns of the tablets produced. Finite element (FE) methods have also been used to analyse the powder compaction. The experimental and numerical studies have shown that the shear bands developed at the early stage of unloading appear to be responsible for the occurrence of capping. It has also been found that the capping patterns depend on the compact shape.