Simulation of abrasive water-jet (AWJ) machining process is difficult for conventional computation methods because it involves complex fluid-particle flow with free surfaces, and fluid–particle-solid coupling. The smoothed particle hydrodynamics method (SPH, a mesh-free numerical method), has been approved its great advantages in such problems. However, the fully resolved SPH model needs a large amount of computation because of the requirement for fine resolution of solid particle, which limits its application in practical problems. Coupling of the discrete element method (DEM) and SPH may be a more effective way to achieve the goal. In this work, a coupled SPH-DEM unresolved model is proposed for simulation of AWJ impacting simulation. The water-jet and the solid are discretized with a series of SPH particles, and each abrasive is modeled by a DEM particle. Different smoothing lengths are used between SPH-SPH particles and SPH-DEM particles, resulting in a double linked-list search method for efficient neighborhood particle searching. The SPH and DEM particles are coupled through the so-called local averaging technique under the Lagrangian framework, in which the interaction forces between the two phases are related to the local mean porosity. Compared with the fully resolved SPH model, the new coupled model is more efficient, and is suitable for large-scale three-dimensional simulation. The process of the single abrasive water-jet impact on the solid is simulated to verify the applicability of the model. The cases of single particle settlement and dam breaking are also involved in this work. Results show that the model can accurately capture the motion of particles in complex fluid flows, and has less time cost of computation. The proposed model could be useful in the applications of AWJ machining and complex fluid-particle flow with free surfaces.